Italian parties agree agenda to form new government; 5-Star votes on deal

Italian parties agree agenda to form new government; 5-Star votes on deal

FILE PHOTO: Italian President Sergio Mattarella holds consultations on political crisis in Rome
FILE PHOTO: 5-Star Movement leader Luigi di Maio looks on as he speaks to the media after consultations with Italian President Sergio Mattarella in Rome, Italy, August 22, 2019. REUTERS/Remo Casilli/File Photo

ROME: Italy's anti-establishment 5-Star Movement and centre-left Democratic Party (PD) unveiled a shared policy programme on Tuesday for their mooted coalition, putting an expansionary 2020 budget at the top of their agenda.

5-Star, created a decade ago out of out of opposition to the PD, has agreed to form a new administration with its former foes to head off a snap election after its previous coalition with the far-right League collapsed last month.

READ: Italy's two-headed centre-left PD takes big gamble

Supporters of 5-Star are holding an online ballot on whether to support the proposed coalition and results are due on Tuesday. Shortly after the voting started, the parties published a 26-point programme that would underpin the planned government.

"This is a very delicate moment for the country. It must be tackled by focusing on the interests and needs of citizens, of the community that we all form together," 5-Star said in a blog on Tuesday, calling on its supporters to back the deal.

Italian benchmark 10-year bond yields hit record lows on Tuesday in a sign that investors believed the new administration would take office, heading off the risk of an early election and prolonged political instability.

At the head of the 5-Star/PD policy list was a commitment to use the coming budget to help the stalled economy grow, but also a promise that they would not endanger public finances.

Italy has the second-largest debt burden in the European Union as a proportion of economic output, and the pact called for greater flexibility from Brussels to overcome the "excessive rigidity" of existing budget rules.

Emphasising social justice, the two parties pledged to introduce a minimum salary, avoid a VAT hike set for January and boost spending on education, research and welfare. The programme also called for a web tax on multinationals and the creation of a public bank to help boost development in the poorer south.

5-Star and PD committed to re-writing Italy's conflict of interest laws, a move that former prime minister Silvio Berlusconi has always sought to head off, fearing it could impact negatively on his Mediaset media empire.

The two parties also promised a "revision" of Italy's motorway concessions. The vague wording left open the hope for Italy's Atlantia that 5-Star would not press ahead with its demand that it lose its lucrative concession in the wake of last year's deadly bridge collapse in the city of Genoa.

The new administration is set to be led by outgoing Prime Minister Giuseppe Conte, who came to power last year at the helm of the previous coalition of 5-Star and the League but is a member of no party. He is due to hold a further round of meetings with 5-Star and the PD later on Tuesday.

Having agreed on the outlines of a coalition pact, the two sides still have to decide on ministers, with uncertainty surrounding the likely role of 5-Star leader Luigi Di Maio.

He served as deputy prime minister, industry minister and labour minister in the previous administration, but looks unlikely to keep any of those portfolios in the new cabinet.

In a Facebook post on Monday he did not say whether 5-Star supporters should back the deal and there remains some uncertainty over whether the online vote would pass.

An SWG opinion poll on Monday said 51 per cent of 5-Star supporters backed the tie-up with the PD, while some 69 per cent of PD voters endorsed the idea. The 5-Star ballot closes at 6.00pm (1600 GMT) and results are expected shortly afterwards.

Source: Reuters/nh