Italy’s Billion-Euro-A-Day Ministries

Half of €283 billion annual spending goes on administration

ROME – Ministerial expenditure has again come under pressure to ensure the success of the first stage of the spending review. The campaign should now guarantee savings of €5 billion instead of €4.2 billion. The adjustment, needed to respond to earthquake damage in Emilia, is set to be approved at Monday’s [today’s – Ed.] meeting of the interministerial committee, chaired by the prime minister, Mario Monti.

The session will draft guidelines for the decree law to come into effect at the end of the month. Experts hope to avoid October’s – at least – one per cent increase in VAT rates, which provides resources for earthquake reconstruction. Where will the money come from? Through cuts of €5 billion to public spending between June and September 2012, the equivalent of roughly €8.5 billion in structural savings from 2013. Three billion euros is expected to come from spending cuts being drafted by special commissioner Enrico Bondi and the rest will be clawed back through further cuts to ministries’ current expenditure. The Senate’s budget service has analysed all items of ministerial spending, which represent €283 billion (including salaries) out of Italy’s €779 billion total expenditure. Half of those resources, some €108 billion, are required merely to keep the ministerial machinery running, in comparison with the €36 billion that goes into the capital account.

Senate analysts highlighted the largest allocations at each ministry in proportion to the total 2012 budget. For example, the €79 billion spent by the economy ministry includes transfers to publicly owned companies: €1.8 billion to the railway, ANAS (road management) and ENAV (air traffic control) enterprises; and €4.4 billion to INPS (social security) to cover the deficit of the railway pension fund. There is an odd-looking transfer of €1.1 billion to “religious denominations”. Operating expenditure includes substantial amounts set aside to bolster the fight against tax evasion: €1.4 billion to the financial police and €2.6 billion for suppressing fraud and tax offences. The development ministry costs €7 billion and devotes €6.6 billion to capital account expenditure. The report focuses on a number of operating expenses: €17 billion in transfers to the competition and markets watchdog; €122 million to the foreign trade institute, ICE; and a capital injection of €158 million to the new technology, energy and environment agency, ENEA. The ministry of employment has a budget of €100 billion, spending as much as €98 billion on social policy while €300 million keeps local offices operating. Some €3.2 billion of the justice ministry’s €7 billion goes on keeping the courts working but the €848 million spent on electronic eavesdropping comes under the microscope. Out of €1.7 billion spent by the foreign ministry, €579 million keeps offices abroad ticking over and €461 million goes in contributions to international organisations.

The education ministry lavishes €40 billion of its total €44 billion spend on school education and €444 million on universities. Experts highlight the €269 million in support for state-recognised schools and €84 million for privately owned universities. The interior ministry sets aside €486 million of its €11 billion budget for the operating expenses of prefectures. Stand-out items here are the €54 million spent on protecting police collaborators and €200 million on migrant reception services. The ministry for infrastructure and transport costs €7.5 billion, of which €5.5 billion goes on investments, including some €581 million in relief for shipbuilders. Defence accounts for €19 billion, €17 billion of which go on operating expenses and whose most significant investments include €1.9 billion for the construction and purchase of equipment and services.

English translation by Giles Watson

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