The Financial Resources for Public Investments
4.3. Conclusions and Some Policy Prescriptions
As underlined throughout the chapter, there has been a dramatic decline in public investment in Italy since 2009, implying a substantial investment gap. This decrease has mainly been driven by the decrease in investments by local governments, which have historically accounted for roughly 60% of the country’s overall public investments.
However, Italy is not only facing a strained situation, where smaller and smaller amounts of financial resources are allocated to public investment. Indeed, one of its main obstacles is transforming the allocated financial resources into actual construction sites: a gap between the planned expenditure for investment and the results exists. The situation is particularly critical regarding suspended public works. Since April 2018, Associazione Nazionale Costruttori Edili (ANCE) has monitored (through www.
sbloccacantieri.it) the infrastructure works throughout the country, which are delayed or suspended, due to complex procedures, suffocating bureaucracy, impediments linked to the application of the Public Procurement Code or lack of financial resources, as well as political vetoes, which call into question the start and/or continuation of already planned works.
22 For further details see Ufficio Parlamentare di Bilancio (2020).
Between April 2018 and January 2019, ANCE identified 574 suspended works worth approximately €39 bn (ANCE 2019). Looking at their territorial distribution, 380 works (66% of the total, worth about €25 bn) were located in the Northern regions;
62 works (accounting for €9 bn) were in Central Italy and 132 works (the remaining €5 bn) were in the Mezzogiorno.
Regarding the size of the suspended sites, 544 are small-medium sized, worth €2.6 bn; 30 are above the €100 mn threshold (for a total value of €36.4 bn) and mainly concern the construction of new transport infrastructures or the modernization of existing ones, aimed at improving the territory’s competitiveness. In addition, there are relevant works underway to improve citizens’ health and safety, such as hospitals and projects which limit hydro-geological instability. Projects greater than €100 mn are mainly concentrated in Northern Italy (17 works account for €24 bn), five works (€8.2 bn) are in Central Italy and eight projects (€3.5 bn) are in the South.
Concerning unfinished work, “Anagrafe delle opere incompiute” (managed by the Ministry of Infrastructure and Transport, according to Law 214/2011) identified 647 public works, which were started, but not completed, for a total value of almost €4 bn at the end of 2017. Among the causes of the stalemates, a lack of funds is indicated in more than half of the cases (a phenomenon that includes slowdowns in the supply of resources).
In conclusion, the limited effectiveness of relaunching economic growth policies is not ascribable to a single factor, but rather lies in the coexistence of several elements.
Certainly, the accounting harmonization process has introduced innovations in the management of resources, which have not been completely transposed by administrations, and thus influence their spending capacity. Indeed, the changes to fiscal rules require time to be assimilated by the institutions, especially since their investment capacity, after years of inactivity, has been further weakened by employment turnover (ANCE 2019).
Another element to consider is the implementation of the new Public Procurement Code, and more generally, the excessive bureaucracy and the complex institutional and regulatory framework, which together lead to innumerable obstacles for the actual creation of public infrastructure.
To sum up, policy prescriptions, coming from the main findings of our analysis are as follows:
• Since one of the main causes reported by Anagrafe delle opere incompiute is the lack of funds, an appropriate management of time mismatches in the availability of resources, which come from different sources, is necessary.
• Addressing greater public investments in the Mezzogiorno area, in order to reduce the infrastructure gap. In particular, it is important to avoid the substitution effect between ordinary and additional resources. Indeed, additional resources have often replaced ordinary ones in recent years, rather than being added to them.
4. Public Investment Trends across Levels of Government in Italy 79
• Unlocking the turnover of PA personnel and the resources dedicated to professional training, in order to rebuild the technical skills within the administration.
• Establishing a precise and clear governance framework, which excludes overlaps and conflicts of competences between institutions and levels of government.
• Improving the quality of infrastructure projects.
• The reconstitution of a complete and reliable regulatory framework (interventions on Public Procurement Code, the role of the Italian Anticorruption Authority (ANAC) and of Corte dei Conti).
• Rationalizing the entire process of public procurement, in particular by eliminating the inefficiencies creating long ‘idle times’.
• Paying attention to the maintenance of public infrastructures: the available empirical evidence suggests that, in Italy, the provision of infrastructure is inadequate, or is at risk of becoming so, due to a lack of maintenance.
For Italy, implementing a massive investment program over the next years is a key challenge that needs to be addressed in order to improve GDP growth. But, how might it be financed, given the current concerns regarding Italy’s public finances? As stated by other authors in the above report, the obvious and necessary conclusion is the introduction of a Golden Rule, which excludes public investments from the deficit limits.
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