Democratic Party MP Emanuele Fiano, who had put the bill forward, on Thursday declared the deal “dead” after 60 MPs opposed it in a secret ballot.
If passed, the new electoral law would have seen Italy adopt a German-style system based on proportional representation to be used at the next elections.
It had in theory received the backing of all four main parties: the ruling Democratic Party (PD), Berlusconi's Forza Italia (FI), the anti-establishment Five Star Movement (M5S) and far-right Northern League (LN), and many observers expected its passing to lead to elections as early as September this year.
Italy must hold its elections no later than spring 2018, but there have been calls for early elections from all opposition parties and even from within the PD. However, only President Sergio Mattarella has the authority to call elections, and he is unlikely to do so until a new electoral system is decided upon.
Under the current law, there are discrepancies between the way each house of parliament is elected, which it is feared could lead to competing majorities in each house, and ungovernability. This is because the law had been drawn up to accommodate changes to the bicameral system proposed in a December referendum – which was ultimately defeated.
Democratic Party leader Matteo Renzi said the collapse of the deal on Thursday was “an impressive failure” for a bill which had been backed by all of Italy's main parties.
“We did everything to try and approve an election law,” said Renzi, as the PD and M5S each accused the other of changing their minds and opposing the bill in a secret ballot (Berlusconi meanwhile said both those parties shared the blame).
Economic analyst Lorenzo Codogno noted: “In a day full of events in the States, the ECB and British elections tonight, some excitement from Italy was overdue.”
Codogno outlined two possible options for the country: either the process of reforming the electoral law will start again from the beginning and be passed this year, with possible early elections, or elections will take place in the spring with a law amended by the Constitutional Court.
“The law under discussion would not do much to provide the country with a stable government after the elections,” the economist added. “Both the new and the old system would most likely produce a hung parliament.”
The problems arose from an amendment on applying proportional representation to elections in the Trentino Alto-Adige region, which had not been agreed on before. The Five Stars approved and the PD opposed.
Renzi labelled the M5S “unreliable” and said that failing to stick to the pact amounted to “making fun of the Italian people”. He said the PD was willing to strike a new deal with opposition parties, and was “awaiting the proposals of those who changed their minds”, but that he was “not particularly optimistic”.
Both the M5S and LN have renewed calls for snap elections after the bill failed. Five Star MP Luigi Di Maio, widely expected to run as the party's candidate for PM when elections are held, said there was “no chance of starting again”.
The debate comes as Italians in hundreds of locations prepare to head to the polls for local elections on Sunday; the last votes scheduled to take place before the next general election and a key test.
Those results should help to speed up negotiations on the new electoral law, as they will give parties a clearer idea of their support.