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Quality and efficiency in public services, utilities and infrastructure

    • Palermo
    • 24 October 2008

          The global financial crisis will have a major impact on the future of all of Italy’s economic system, particularly the utilities sector. Adopting an evolved Keynesian approach – above all for large infrastructures – could play a crucial role in increasing the country system’s competitiveness. The resumption of large public works – which should begin soon to help deal with this cycle of economic recession – should include identifying some extensive strategic works on which finances should be concentrated.

          Many are convinced that public finance measures coordinated with the EU are necessary. Particular emphasis was placed on concerted action for works where construction could already begin, such as the Turin-Lyon high speed line or the Brennero tunnel. Here financing could be obtained from the institution of European sovereign wealth funds, the EIB and the private sector. However, some debate participants warned against a return of heavy state intervention in the economy. In their opinion, the demand needs support but substantial involvement in business capital should be avoided.

          On the other hand, companies are having serious problems in balancing their budgets, and complain of the lengthy bureaucratic timetables for authorizations and disproportionate length of time for permits to open building yards. Another, far from secondary, problem is the strong tendency to award contracts to the lowest bidder for tender: greater control is essential to ensure that bids are offered correctly and to eliminate abnormal conditions.

          Regarding the utilities sector in general, the debate made a series of evaluations on the liberalization process. There was general agreement as to the success of the energy sector, where there are still defects in the uncompleted liberalization of other strategic sectors such as local transportation. Many participants also raised the issue of the need for reform of Title V of the Constitution to restore important tasks to the central government, primarily in the area of energy and to eliminate the excessive number of decision-making levels: municipalities, provinces, regions, state and EU. More clarity on authority was hoped for by many of those present.

          As far as national transportation is concerned, the debate underscored the excessive number of airports in Italy, now more than a hundred. A proposal was made to reduce the number, concentrating efforts on those with the largest amount of traffic. Sea transport – penalized at the moment in the areas of both freight and passenger transport – also deserves more attention. More financing for maritime transport could help develop the entire sector. 

          In addition, there was a discussion on public services, both in terms of quality and cost. The costs for local as well as national transport in particular were considered far too low in absolute terms and when compared to the European average. Higher prices could have a political impact, making it difficult to manage consensus, and thus creating problems for the local and the national government. Privatization of local services needs to avoid creating problems of employment. Otherwise, social cohesion could be jeopardized and there is the risk of a gap between efficiency and good local government. A long-term, well-balanced vision is therefore needed that protects the parameters of financial and management efficiency without forgetting the rights of citizens.

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