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

[September 03, 2019]  By Crispian Balmer

ROME (Reuters) - Italy's anti-establishment 5-Star Movement and center-left Democratic Party (PD) unveiled a shared policy program 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 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.

Supporters of 5-Star are holding an online ballot on whether to support the proposed coalition and results are due by 1730 GMT. Shortly after the voting started, the parties published a 26-point program 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.

Emphasizing 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 program also called for a web tax on multinationals and the creation of a public bank to help boost development in the poorer south.

MINISTER PUZZLE

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 <MS.MI> media empire.

5-Star Movement leader Luigi di Maio speaks to the media after consultations with Italian President Sergio Mattarella in Rome, Italy, August 28, 2019. REUTERS/Ciro de Luca/File Photo

The two parties also promised a "revision" of Italy's motorway concessions. The vague wording left open the hope for Italy's Atlantia <ATL.MI> that 5-Star would not press ahead with its demand that it lose its lucrative toll road concession in the wake of last year's deadly bridge collapse in 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 role of 5-Star leader Luigi Di Maio.

He served as deputy prime minister, industry minister and labor 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 is no certainty the online vote will pass.

An SWG opinion poll on Monday said 51% of 5-Star supporters backed the tie-up with the PD, while some 69% of PD voters endorsed the idea.

The 5-Star ballot closes at 6.00 p.m. (1600 GMT) and results are expected shortly afterwards. A record high 30,000 votes were cast in the first two hours of balloting, the group said. In all, 115,372 registered supporters are eligible to take part.

"In the early stages of voting, the high influx of users on the system caused minor slowdowns ... however the smooth running of the votes was guaranteed," the 5-Star's web-based Rousseau platform said on Facebook.

(Additional reporting by Angelo Amante and Giuseppe Fonte; Editing by John Stonestreet and Peter Graff)

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