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 fulfill the ceremonial roles of the (former) Italian monarchy.
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. Since 2005, a majority of seats in the Chamber of Deputies is awarded to the coalition which obtains the most votes in that Chamber.
The President of the Italian Republic, Giorgio Napolitano, was re-elected by Parliament for a second term on 20 May 2013. It was the first time in Italy’s modern history that a President was re-elected. His appointment came two months after Italy’s parliamentary elections on 24 and 25 February, which had resulted in a hung parliament and failed to produce a government. Immediately after his re-election, President Napolitano appointed deputy-secretary of the Democratic Party (PD), Enrico Letta, as Prime Minister. Prime Minister Letta subsequently formed a coalition government, which includes Silvio Berlusconi’s Centre-right People for Freedom party (PdL) and former Prime Minister Mario Monti. The largest party in opposition is the Five Star Movement (M5S), a new force in Italian politics that won 25 per cent of the vote.
Since 2006, Italians living abroad (a total of about 4.3 million people) have been eligible to vote in the Italian elections. They may elect 12 members in 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. During the 2013 elections, 3.4 million Italians living abroad were eligible to vote in the lower house elections, against 3.1 million in the Senate elections. Two Australians members of the PD were elected to represent the Oceania and the Antarctic division: Marco Fedi in the Chamber of Deputies and Francesco Giacobbe 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 focused on the domestic market alongside 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.
Italy’s economy is faced with a number of deep-rooted challenges. It is 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. Italian exports have been falling as a percentage of global trade and, for the last decade, economic growth has barely exceeded one per cent per annum. Most raw materials needed for manufacturing and more than 80 per cent of the country's energy sources are imported. In addition, Italy has a sizeable underground economy concentrated in the agriculture, construction and service sectors, which by some estimates accounts for as much as 17 per cent of GDP. As the first country in the world to record more people aged over 65 than under 15, Italy's low fertility rate and rapidly aging population, as well as its quota-driven immigration policies, form a strain on the economy.
Italy is currently facing its worst recession since World War II. Public debt has increased steadily since 2007, nearing 130 per cent of GDP in 2013, and low investor confidence about the euro-zone crisis have sent borrowing costs on government debt soaring. The Italian debt crisis reached its high point in late 2011 and resulted in the appointment of a technocratic government under Mario Monti in November that year. His government passed a suite of austerity measures, including tax increases, pension reforms and cuts to public administration to reduce the country’s budget deficit and help bring down borrowing costs.
While these measures helped stabilise the Italian economy to some extent and increased market confidence, they further stunted economic growth and sent unemployment soaring to 12 per cent, with youth unemployment at 38 per cent. The new Letta-Government has responded by committing to growth-boosting measures to counter unemployment and create new jobs. These include tax reductions, financial support for small and medium-sized business and funding for innovation and research. Meanwhile, however, Italy’s debt continues to rise. The OECD has forecast that Italy’s budget deficit will rise to 3.3 per cent of GDP this year and 3.8 per cent in 2014 – well over its 3 per cent EU target. Public debt is expected to rise to a new record of 131.5 per cent of GDP in 2013 and climb further to 134.2 per cent.
Australia and Italy enjoy a warm and long-standing relationship underpinned by strong community ties. 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 and in 2011 767,000 Australians were recorded travelling into 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 of that year.
In March 2011, then-Sports Minister Mark Arbib opened the Australian Sports Commission’s European Training Centre in Varese. The facility is regularly used by a range of high performance Australian athletes as a recognised Olympic Training Centre and is central to the preparation of Australian Olympic Teams for both the Summer and Winter Games.
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 April 2013 an updated science and technology MOU was signed. In July 2009 an MOU was signed regarding cooperation on the Square Kilometre Array, an 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 Anthony Albanese MP, Minister for Infrastructure and Transport (to discuss aviation and other transport issues) (15-21 November)
- 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
- Secretary of State Staffan de Mistura, Italian Deputy Foreign Minister (accompanied a major business delegation)
- 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 2012 it was our sixth-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 14th largest merchandise trading partner. Two-way merchandise trade in 2011-12 was $A6.4 billion, in Italy's favour by a ratio of almost 5:1. Items such as coal, wool, wheat and leather 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.
Italian investment in Australia is relatively low, reflecting Italy's generally low levels of FDI abroad, most of which is directed within the EU and Mediterranean area. Exports remain strong, however, in the rail sector, and there is 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 2011 was A$1,9 billion.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 May 2013