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POLITICS

Renzi calls for ‘radical change’ in Italy

UPDATED: Prime Minister Matteo Renzi called for a "radical and immediate change" in Italy in an energetic and impassioned speech to parliament on Monday which outlined his government programme but was light on detail.

Renzi calls for 'radical change' in Italy
The new premier called for a "radical and immediate change" in Italy in an impassioned speech on Monday. Photo: AFP/Andreas Solaro

The new premier said there were no excuses for failing to tackle the recession-hit country's ills and told senators Italy would become a "country of opportunity" in a largely ad-lib speech ahead of a confidence vote in the upper house of parliament.

"If we lose this challenge the fault will be all mine. No-one has an alibi anymore," said the 39-year-old — Italy's youngest ever prime minister.

"This is an Italy of possibilities, an Italy of fundamental change," he said, stressing the "urgency" of implementing reforms in "a rusty country…gripped by anxiety".

Renzi, who grasped power after helping oust his predecessor Enrico Letta over failures to do enough to boost a flagging economy, reiterated plans for rapidly overhauling the tax system, job market and public administration.

Telling the personal stories of specific individuals — including a jobless father and a man killed by a reckless driver — he pledged to review unemployment benefits, establish a guarantee fund for small companies and comprehensively reform the justice system.

He also promised to cut the tax burden by a double-digit figure by the first half of 2014 and pay off public administration debts.

The confidence vote later Monday will be a key test of Renzi's power to unite warring factions in Italy's parliament and secure a solid majority.

The former mayor of Florence is expected to win based on the support of his own centre-left Democratic Party (PD) and his coalition partners — the centrists and the New Centre Right (NCD) party.

Political analysts will however be paying close attention to the size of the majority he manages to secure, as an indication as to whether the new government has a chance of living out its mandate until 2018 or whether the country will end up back at the polls.

"We are not afraid of going to the polls," Renzi said.

Former premier Silvio Berlusconi's Forza Italia (FI) party is in opposition, although it has agreed to support key decrees on a case by case basis.

The anti-establishment Five Star movement — Italy's other main opposition party — has slammed Renzi for stealing the top job and called for immediate elections, and some political watchers say Renzi's failure could significantly boost their numbers.

A bold-faced Renzi stared down critics hollering insults from among the movement's benches and spoke out against populism and for Europe.

He said Italy must tackle its towering public debt — equivalent to 130 percent of total economic output — not because German Chancellor Angela Merkel has called for it, but because "it is our duty to, for our children's sake".

He spoke of the need for greater transparency — making public spending receipts available online — and of the need to attract foreign investors and shake off the image of Italy "as just a great holiday destination".

Renzi's insistence on speed has impressed some analysts, who say it may help him avoid getting stifled under the weight of Italian bureaucracy.

"By keeping up the momentum, Renzi is increasing the chances of these important reforms going through despite likely resistance from various camps," Christian Schulz, senior economist at Berenburg, said in a note.

"Much will depend on the concrete reform proposals and how they will be watered down in the inevitable political wrangling afterwards," he said.

But Chiara Corsa and Loredana Federico from Unicredit asked "whether the Renzi government is strong enough or sufficiently 'revolutionary' to implement the reform agenda".

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COST OF LIVING

Fuel tax cut and help with energy bills: Italy approves inflation aid package

Italy on Thursday night approved new measures worth around 17 billion euros ($17.4 billion) to help families and businesses manage the surging cost of fuel and essentials.

Fuel tax cut and help with energy bills: Italy approves inflation aid package

As expected, the final version of the ‘aiuti-bis‘ decree provides another extension to the existing 30-cents-per-litre cut to fuel duty, more help with energy bills, and a tax cut for workers earning under 35,000 euros a year.

The package also includes further funding for mental health treatment: there’s another 15 million euros for the recently-introduced ‘psychologist bonus’ on top of the 10 million previously allocated.

READ ALSO: What is Italy doing to cut the rising cost of living?

There are also measures to help agricultural firms deal with this year’s severe drought.

Italian Prime Minister Mario Draghi described the new package as an intervention “of incredible proportions”, which corresponds to “a little over 2 points of national GDP”.

However, he said, no changes were made to the national budget to pave the way for the new measures.

The measures will be funded with 14.3 billion euros in higher-than-expected tax revenues this year, and the deployment of funds that have not yet been spent, Economy and Finance Minister Daniele Franco said.

Italy has already budgeted some 35 billion euros since January to soften the impact of rising fuel costs.

The decree is one of the last major acts by outgoing Prime Minister Mario Draghi before an early general election next month.

Elections are set for September 25th but the former European Central Bank chief is staying on in a caretaker role until a new government is formed.

Draghi said the Italian economy was performing better than expected, citing the International Monetary Fund’s estimate of three percent for 2022.

“They say that in 2022, we will grow more than Germany, than France, than the average of the eurozone, more than the United States,” he told a press conference.

But he noted the many problems facing Italy, “from the high cost of living, to inflation, the rise in energy prices and other materials, to supply difficulties, widespread insecurity and, of course political insecurity”.

Inflation hit 8 percent in Italy in June – the most severe spike the country has experienced since 1976.

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