Proceedings at this national roundtable got underway with participants observing that Italy periodically looks to privatization as a means to restoring the fragile fortunes of its public finances. Yet while the increasingly straitened condition of these finances is what gives rise, from time to time, to the need to engage in such sell-offs, privatization cannot and should not merely entail a quick grab for cash. Indeed, the roundtable saw a number of different aspects of privatization discussed.
First and foremost, the participants felt it necessary to clearly examine the reasons for and purposes of privatization. It was suggested that the process should not be considered as simply a tool for reducing public debt, but also as an opportunity to act on the denominator of the debt/GDP ratio, helping to maximize the economic and industrial potential of the country.
Secondly, it was viewed as essential to identify the assets to be privatized, including publicly-controlled enterprises, which number over 7,000 today, as well as real estate owned by the state and the various local authorities. In both cases, the crossover between general interests and local prerogatives makes the matter quite complex. In order to understand what to privatize, sectors need to be identified where a transition from the visible hand of the state to the invisible hand of the market might represent an improvement in terms of efficiency and determine an increase in overall wellbeing. This is leaving aside any Manichaean assertion that efficiencies can only be achieved in private hands, but taking into account industrial policy and national security considerations that apply to sectors and firms deemed strategic.
Thirdly, it was also seen as essential to gauge how to go about privatizing, and which models and rules to follow. The first regulatory considerations that come into play in this regard are European-level obligations to comply with macro-fiscal targets, rules on state aid, and legislation governing antitrust matters and the free movement of capital within the internal market. Then there is the crucial issue of ensuring that privatizations lead to increased competition in the relevant sector, which is only achieved if the sell-off process is accompanied by a simultaneous process of liberalization. To do otherwise is to risk transferring privileges and inefficiencies from public to private hands. In addition, in order to secure benefits in terms of improved efficiency and governance in the transition from a public to a private shareholding, emphasis was laid on the importance of reviewing and clearly redefining the rules of governance. Indeed, it was stressed that a privatization process can only succeed if a system of governance is put in place in advance that is consistent with a new ownership structure and with a new set of incentives and drives. Also imperative is that the entire process be conducted in a transparent manner, according to clear rules that are not subject to constant changes, which undermine legal certainty. In order to maximize the profits from sales of public assets, it is necessary to follow asset management criteria and use tools that are tailored and fit for purpose, as well as monitoring and evaluating market conditions in a timely manner. Finally, the costs and benefits of the entire process must be weighed up. The fact that costs might be high in the short term, especially in terms of job losses, should not mean losing sight of any longer-term benefits.
In rounding up the discussions, it was acknowledged that the measures taken by Italian governments over the last twenty years have not always had the desired effect. Pressure from internal and external lobby groups have often led to foot-dragging and less-than-optimal results. In order for any privatization process to yield the desired outcomes, it must form part of a broader plan to kick-start the national economy in line with a guiding strategy laid down by a national coordinating body that makes consistent economic policy choices and strives to achieve the primary objective of putting the country back on the road to growth.