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European Commission

Johannes HAHN

Commissioner for Regional Policy

Using EU Regional Funds to create lasting jobs and growth in Italy: The Urgent Challenge

"Towards Europe 2020" Forum of Public Administration/Rome

28 May 2013

Ladies and Gentlemen,

We are at a critical juncture for Europe and for Italy where unemployment is unacceptably high - at 11%, while among the young it is almost 40% . We see low growth, loss of competitiveness, fiscal constraints, social pain, and in some quarters emerging anti-European feelings. 

I believe the role of the public sector is more important than ever at a time where the private sector is suffering from credit crunch, and a record rate of firms are going under.

Public investment is particularly crucial, to support demand but most importantly to increase productivity, to create jobs, to provide credit, to finance key networks, to improve the education level and to lower school drop-outs. In a nutshell, to bring the EU economies out of the crisis.

EU Regional Policy is becoming the main public resource to support these investments. In many countries we are talking about more than 50% of their total investment capacity. A great opportunity, but also a great challenge.

We are here today to discuss the preparation of the new programmes: but we cannot prepare the future without drawing lessons from the present.

We have seen very important measures taken in the past months but overall, the current period of EU regional policy in Italy has not been an easy ride.

There are still €31 billion which need to be spent before the end of the period. The challenge is enormous, but I am confident that working together we will deliver.

How did we get to this point? I share the analysis made by former Minister of Territorial Cohesion Fabrizio Barca: a highly fragmented approach, weak monitoring and guidance from the central administration; weak administrative and technical capacities in some managing structures; too high staff turnover due to the "spoil" system - and, we must recognise, an exceptional macro-economic situation, which has not made the work easier. 

Many things were achieved last year to put things in order and to accelerate the implementation of the policy: in fact I even called it Annus Mirabilis. We had the Action Plan on Cohesion with the quick delivery of technical support to administrations, the definition of rigorous expenditure targets and with a broad exercise of re-programming.

But these efforts must intensify if we want to have a second Annus Mirabilis and ensure that no resources are lost. For example by making the spending targets even more compelling; by using resources elsewhere that are not spent within a given deadline; by reinforcing technical support to weak programmes; and even by conditioning future programmes to current performance. Now it is time to deliver.

Let's turn to the future, the real topic of the Forum today. Let's not be mistaken. The new policy is a more demanding one. Performance and effectiveness are at the core of what the Commission has proposed. It is what the EU citizen asks: an effective use of scarce public resources and an end to business as usual.

Let me briefly remind you the main elements of our proposed reforms.

First, we need to concentrate investments on a few, clear priorities. You, as administrators, will have flexibility but choices must be made. The thin distribution of resources to make everybody happy is no longer an option.

Second, we need to improve the effectiveness and performance of the policy. You need to set clear and credible targets and define indicators to measure progress towards those targets. This will help evaluate progress of the each programme and establish the basis for a real political debate on substance rather than on procedures.

Third, we need to put in place the right framework conditions (what we call ex-ante conditionalities) to allow investments to be made in the most effective way. As the name suggests, these are conditions that have to be fulfilled before spending any funds in specific fields. Conditions that ensure that investments from the policy are efficient and effective.

If we fail to be credible on all these elements we run the risk that the policy loses its importance. I think this is a price nobody wants to pay and above all, no region or Member State can really afford. Regional Policy guarantees a stable investment framework over a period of 7 years. I don't know any regional or national budget that is outlined for such a long period.

But none of this can work without a performing, efficient, modern public administration behind it.

Let's be honest. Things cannot continue as they are. We need a profound reform of the governance of regional policy. 

The issue has been recognised, and for two consecutive years a "country specific recommendation" has been addressed to Italy precisely on this point. 

The question of governance is the key issue for the next programming period and for the negotiations between Italy and the Commission on the new strategies and programmes. Let me share with you three objectives which should guide our work and, for each of them, few concrete ideas on how things can be improved.

First, we need to improve the structures responsible for managing and auditing the policy.

This should start with the definition of a strategy for administrative improvement of the responsible authorities, which should be endorsed at political and administrative level.

Also, the office responsible for the interventions should be clearly identified and be entrusted with the necessary powers on the other concerned structures.

There must also be a transparent system of deputizing, to avoid situations where programmes remained blocked for months simply because there was no substitute.

And where 2007-2013 experience has shown clear bottlenecks and weaknesses we must consider stronger central guidance on management and control matters and mobilisation of technical support, along the lines of the current experience with Task Forces in Campania and Sicily.

Secondly, we need to improve the monitoring and transparency of the work done.

Implementation and financial data as well as beneficiaries should be made available on-line and updated regularly. This is the only way to ensure public scrutiny and accountability.

This in turn can contribute to improving the take up of co-financed projects, the ability of such projects to respond to local needs, and thereby to the confidence of people in the effectiveness of our policy. We can build on the OpenCohesion website, a unique attempt in Europe to provide full transparency on the operation of EU Regional Policy.

The final objective must be to improve the timeframe within which decisions are taken and projects are implemented.

We need to fix quality standards, whose non-respect may also result in sanctions.

Standards should relate to reducing the administrative burden for businesses and red tape in general. They should promote e-government and e-procurement, ensuring the efficiency of the judicial system and making sure that firms can operate in a secure legal environment and that they are paid on time.

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