Italy, officially the Italian Republic, is a unitary parliamentary republic in Southern Europe. Italy borders France, Switzerland, Austria, and Slovenia to the north and extends into the Mediterranean Sea to the south. Italy has a population of 59.7 million (2013) and its capital is Rome. A founding member of the European Union, Italy last held the EU Presidency in the second half of 2014. As the world’s ninth-largest economy, Italy sits in the elite clubs of the largest economies (EU, OECD, G7, G8 and G20) and has a central role in global trade and financial systems.
As two highly-developed and complementary G20 economies with robust international engagement and enduring people-to-people ties, Australia and Italy share a warm relationship with much scope for expansion. Our cooperation intensified in 2014 during Australia’s chairmanship of the G20 and Italy’s Presidency of the European Union.
According to the 2011 census, 916,120 Australians claimed Italian ancestry with 185,402 Australian residents having been born in Italy.
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. During 2013-14, 16,045 working holiday visa were granted to Italian citizens (up 0.5 per cent on the previous year).
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. Several 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 Julie Bishop MP, Minister for Foreign Affairs (to attend the ASEM Summit in Milan)
- The Hon Bronwyn Bishop MP, Speaker of the House of Representatives
- Her Excellency Ms Quentin Bryce AC, Governor-General of the Commonwealth of Australia
- The Hon Kevin Rudd MP, Minister for Foreign Affairs
- Mr Matteo Renzi, Prime Minister, visited Australia in November 2014 to attend the G20 Summit in Brisbane and to hold an investment-focused visit to Sydney
- 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
Bilateral economic and trade relationship
Italy is a significant market for Australia. It is one of our largest trading markets in the European Union (EU) and in 2013-14 was our 15th largest merchandise trading partner globally. Two-way merchandise trade in 2013-14 was $6.7 billion, in Italy's favour by a ratio of almost 8:1. Items such as wool, coal, leather and beef dominated the mix of Australian exports. Major Australian imports from Italy in 2013-14 included medicaments, pumps, electric plant and non-electric engines and motors.
Against the backdrop of one of Italy’s longest economic recessions, tourism arrivals from Italy to Australia grew 97.6 per cent to 72,463 during 2013-14. Expenditure by Italian visitors in Australia rose 21.3 per cent to $519m in the same period. In the year ending June 2014, Italy was Australia’s 15th largest outbound market, with 177,737 departures to Italy.
Italian investment in Australia is relatively low, reflecting Italy's focus within the EU and Mediterranean area. However, there has been a recent welcome interest by Italian companies in investing in Australia including as an entry-point to the dynamic Indo-Pacific region. Total stock of investment from Italian companies in Australia in 2013 was worth over $2.2bn. Australian investment in Italy in 2013 was worth almost $5 billion. A number of Australian companies, including Lend Lease, architectural firm Woodhead and Cochlear, have business interests in Italy. Westfield is investing in a new shopping mall project in Milan which, when completed, will be worth around $1.3bn.
The Australian Trade Commission (Austrade) is the Australian Government’s trade, investment and education promotion agency. Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally. In established markets, such as Italy, Austrade assists Australian exporters through referrals to specialist service providers and business advisors, for assistance on a commercial basis. . Austrade maintains an office in Milan. For further information please contact Austrade in Australia on 13 28 78 or email firstname.lastname@example.org.
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 who is elected for a seven year term and has a largely ceremonial role.
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.
The President of the Italian Republic, Sergio Mattarella, was elected on 31 January 2015. His appointment came after the retirement of President Emeritus Giorgio Napolitano, the only President in Italy’s modern history to be elected twice.
On 22 February 2014, the leader of Italy’s centre-left Democratic Party (PD) and former Mayor of Florence Matteo Renzi was sworn in as Italy’s youngest ever Prime Minister. Mr Renzi is leading an ambitious program of constitutional, electoral, administrative, labour and economic reforms. Under Mr Renzi the PD gained a convincing victory in the European elections in May 2014, attracting 40.8 per cent of votes cast – the first time since 1958 that a single Italian party had surpassed the 40 per cent mark.
Since 2006, Italians living abroad 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 110 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.
Italy has a highly-developed and sophisticated industrial base supported by a strong medium to small enterprise sector, the majority of which is family owned or controlled. Nonetheless, Italy faces some serious economic challenges.
For the last decade, economic growth has barely exceeded one per cent per annum (GDP is forecast to have contracted 0.4 per cent in 2014) reflecting stagnant productivity, weak demand, tight credit conditions, fiscal adjustments and depressed confidence.
Unemployment has hovered around 12.9 per cent since January 2014. In addition, Italy is divided into a developed industrial north and less-developed south.
Foreign Direct Investment (FDI) remains below the levels achieved by benchmark competitors. Outward Italian FDI is limited and is largely concentrated in Europe and the Mediterranean.
Italian exports have been falling as a percentage of global trade. Most raw materials needed for manufacturing and more than 80 per cent of the country's energy sources are imported.
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 place a strain on its economy.
Italy has a very high ratio of home ownership and very low household and company debt, but public debt has increased steadily since 2007 exceeding 130 per cent of GDP in 2014.
Going forward, the combination of lower oil prices, a weak Euro and important structural reforms may sustain opportunities to restart growth.
Last updated: April 2015