Italy country brief
The constitution of Italy was adopted in 1947, following a referendum on 2 June 1946 that abolished the Italian monarchy and established Italy as a parliamentary republic. The constitution came into effect on 1 January 1948 and established a bicameral parliament (Chamber of Deputies and Senate), a separate judiciary, and an executive branch composed of a Council of Ministers headed by the President of the Council (Prime Minister). The constitution also created the position of President (elected for a seven year term) to fulfil the ceremonial roles of the (former) Italian monarchy.
Giorgio Napolitano was elected by Parliament as the eleventh President of the Italian Republic in May 2006. In November 2011, Mario Monti was appointed Prime Minister following the resignation of his predecessor, Silvio Berlusconi. He leads a technocrat government mandated to steer Italy through the economic crisis facing the country. As a former EU Commissioner and respected economist, Mario Montihas enjoyed strong cross-party support and is expected to lead the country through to parliamentary elections in April 2013. Both houses of parliament are directly elected and are of equal authority. The electoral system in the Senate is based upon regional representation. The Chamber of Deputies has 630 members and the Senate 315 elected senators; in addition, the Senate includes former presidents and several other persons appointed for life according to special constitutional provisions. Both houses are elected for a maximum of five years, but either may be dissolved before the expiration of its normal term. Legislative bills may originate in either house and must be passed by a majority in both.
In the 2006 elections, Italians living abroad (about 2.7 million people) were eligible to vote for the first time. They elected 12 members of the Chamber of Deputies and six Senators representing four overseas divisions: Europe; South America; North and Central America; and Africa, Asia, Oceania and the Antarctic. Two Australians of the Italian Democratic Party represent the Oceania and the Antarctic division: Marco Fedi in the Chamber of Deputies and Nino Randazzo in the Senate. Italy is divided into regions, provinces and municipalities. The constitution lists 20 regions, which are further divided into 95 provinces. Of the 20 regions, five enjoy special constitutional status: Friuli-Venezia Giulia, Sardinia, Sicily, Trentino-Alto Adige and Valle d'Aosta. The regions are responsible for electing their own regional parliaments that exercise substantial autonomy.
The Italian economy has changed dramatically since the end of World War II. From an agriculture-based economy, Italy has developed into an industrial state ranked as the world's eighth-and Europe's third-largest economy. It is a member of the European Union, the OECD, and the G8 and G20 economic forums.
Italy's post-war economic strength has been based on the processing and manufacturing of goods, primarily in small and medium-sized enterprises. The majority of these enterprises are family-owned and are focused on the domestic market and exports to EU and Mediterranean countries. Italy's major industries are tourism, machinery, iron and steel, chemicals, food processing, textiles, clothing and footwear, motor vehicles, and ceramics. Most raw materials needed for manufacturing and more than 80 per cent of the country's energy sources are imported. Italy has a sizeable underground economy concentrated in the agriculture, construction and service sectors, which by some estimates accountsfor as much as 17 per cent of GDP.
Despite its strengths, Italy's economy remains divided into a developed industrial north and less-developed, south with high unemployment. Foreign Direct Investment (FDI) remains well below the levels achieved by its benchmark competitors and outward Italian FDI is limited and largely concentrated in Europe and the Mediterranean.
Moreover, structural impediments to growth and an exceptionally high public debt burden have made Italy vulnerable to scrutiny by financial markets, precipitating its worst recession since World War II. For the last decade, economic growth has barely exceeded 1 per cent per annum and public debt steadily increased to 120 per cent of GDP in 2011, a quarter of the entire Eurozone sovereign debt. Low investor confidence sent borrowing costs of sovereign government debt soaring in the second half of 2011 to record levels of 7 per cent by the end of the year.
The government has undertaken significant legislative reform to balance its budget by 2013, start to reduce the country's public debt and safeguard its competitiveness. Austerity and growth measures since the second half of 2011 include tax increases, cuts to public administration, and ambitious pension and labour reforms.
Italy's labour market has suffered as a result of these measures and the wider Eurozone crisis. Unemployment has hit 10 per cent, with youth unemployment at almost 36 per cent. Weak exports and domestic demand are further slowing Italy's recovery. As the first country in the world to record more people aged over 65 than under15, Italy's low fertility rate and rapidly aging population, as well as its quota-driven immigration policies, will continue to strain the economy.
Italy is currently experiencing negative economic growth and American rating agency Moody's has predicted its economy would contract by 2 per cent in 2012. In July 2012, Moody's cut Italy's debt rating by two notches to Baa2 from A3, citing contagion through the Eurozone crisis from Spain and Greece.
Australia and Italy enjoy a warm and long-standing relationship underpinned by strong community ties. Bilateral trade and investment and the development of cultural and educational links continue to grow. According to the 2011 census, 916,116 Australians claimed Italian ancestry with 185,402 Australian residents having been born in Italy. At least 30,000 Australians are estimated to live in Italy. On 13 December 2011, Governor General Quentin Bryce became an honorary citizen of Conzano, a small town in the Piedmont Region, following her official visit to the region for the 150th anniversary of the Unification of Italy in June. Australia and Italy have concluded bilateral agreements covering culture, double taxation, air services, economic and commercial cooperation, reciprocal social security and health care benefits, and film co-production. A bilateral Working Holiday Maker Arrangement became operative in January 2004. The two countries have also signed a number of Memoranda of Understanding (MOUs) covering science and technology cooperation, defence materiel, defence industry, motor vehicle safety certification, sports cooperation, game meat exports and trade cooperation. In July 2009 an MOU was signed regarding cooperation on the Square Kilometre Array, a proposed international advanced radio-telescope project. Many state governments have signed MOUs with Italian regional governments to promote cooperative activities and exchanges between the two parties.
(Note: Positions indicated in the list below were held at the time of the visits)
- The Hon Mark Dreyfus QC MP, Parliamentary Secretary for Climate Change (to attend the Major Economies Forum on Energy and Climate)
- The Hon Chris Evans MP, Minister for Tertiary Education, Skills, Science and Research
- Her Excellency Ms Quentin Bryce AC, Governor-General of the Commonwealth of Australia (to represent Australia at celebrations surrounding the 150th anniversary of Italian Unification)
- The Hon Kevin Rudd MP, Minister for Foreign Affairs (to attend the Second Libya Contact Group meeting in May and to meet with Foreign Minister Terzi en route from Libya in December)
- Senator the Hon Mark Arbib, Minister for Sport (to open the Australian Sports Commission's European Training Centre in Gavirate, Varese)
- The Hon Kevin Rudd MP, Minister for Foreign Affairs
- The Hon Anthony Albanese MP, Minister for Infrastructure and Transport (for the second Ministerial Conference on Global Environment and Energy in Transport)
- Australian Parliamentary Delegation, led by the President of the Senate, Senator the Hon John Hogg
- Senator the Hon Penny Wong, Minister for Climate Change, Energy Efficiency and Water (for Major Economies Forum on Energy and Climate)
- Senator the Hon Kim Carr, Minister for Innovation, Industry, Science and Research
- The Hon Kevin Rudd MP, Prime Minister
- The Hon Penny Wong MP, Minister for Climate Change and Water
- The Hon Martin Ferguson MP, Minister for Resources and Energy
- The Hon Tony Burke MP, Minister for Agriculture, Fisheries and Forestry
- The Hon Anthony Albanese MP, Minister for Infrastructure, Transport, Regional Development and Local Government
- The Hon Bob McMullan MP, Parliamentary Secretary for International Aid
- Dr Enrico Letta, Deputy Leader of the Italian Democratic Party
- Parliamentary Delegation led by The Hon Marco Fedi, Member of Parliament representing Oceania
- Ms StefaniaCraxi, Undersecretary of State for Foreign Affairs
- Mr Adolfo Urso, Vice Minister for Trade
- Mr Lamberto Dini, Italian Minister for Foreign Affairs, visited Australia in 2001.
Bilateral economic and trade relationship
As the world's eighth largest economy, Italy is a significant market for Australia. In 2011 it was our fifth-largest export market in the European Union (EU) and our third-largest source of EU imports after Germany and the United Kingdom. Overall, Italy was our 15th largest merchandise trading partner, with bilateral trade in goods favouring Italy by almost 5:1. Our services trade in 2011 shows a similar trend with imports from Italy amounting to 1.9 per cent of total share compared to just 0.7 per cent for exports to Italy.
Italian investment in Australia is relatively small, reflecting Italy's generally low FDI abroad, most of which is directed within the EU and Mediterranean area. There is, however, interest in Australia as a base for expansion into Asia. A range of Italian companies, such as Ansaldo STS, Ghella and Rizzani de Eccher, have successfully tendered for major infrastructure projects in the Northern Territory, Queensland and South Australia. Total stock of FDI from Italian companies in Australia in 2010 was A$631million.
The main Italian companies with investments in Australia are Parmalat (dairy product manufacturers), Ferrero (confectionery), Iveco Trucks (motor vehicle manufacture and service), Luxottica (eyewear), Ansaldo STS (railway signalling and infrastructure), Permasteelisa (construction, aluminium, glass), Prysmian Cables & Systems (cables) and Amplifon (hearing aids). ENI, the Italian energy producer, is active in offshore gas and oil exploration in Australia, often in partnership with other companies. In November 2011, SAIPEM, part of the ENI Group, won a €1.3 billion offshore gas pipeline project in Australia.
Major Australian investments in Italy include Po Valley Energy which owns a number of onshore and offshore gas exploration and production licences and owns and operates two gas treatment plants in Italy, Bovis Lend Lease which participates in major Italian and European infrastructure projects via its Milan headquarters, and architectural firm Woodhead which has established a joint venture with Italian firm Interplan to service the European market. Cochlear, Chep, Aconex, Australian Wool Innovation, Berrigner Blass, Nufarm, Dyesol, Solahart and Vix-ERG are other Australian businesses with a direct presence in Italy, while NewsCorp wholly owns Italy's leading satellite TV company, SKY Italia.
Two-way merchandise trade in 2011 was $A6.3 billion, in Italy's favour by a ratio of almost 5:1. Items such as coal, wool, iron, steel and wheat dominated the mix of Australian exports. Major Australian imports from Italy in 2011 included medicaments, organo-inorganic compounds, household-type equipment, and heating and cooling equipment and parts.
The Australian Trade Commission (Austrade) is the Australian Government's trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio. The section 'For Exporters' on Austrade's website is a valuable starting point for information on export opportunities to many countries, including Italy. Overseas companies interested in establishing their business in Australia can visit the 'For Investors' section. Austrade maintains an office in Milan. For further information please contact Austrade in Australia on 13 28 78 or email email@example.com.
Last updated July 2012