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Italy’s Five Star Members Back Deal for New Conte-Led Government

Italy’s Five Star Members Back Deal for New Conte-led Government

(Bloomberg) -- Italian Premier-designate Giuseppe Conte cleared what could be the final obstacle in his bid to put together a new government, after supporters of the anti-establishment Five Star Movement backed him in an online vote.

Five Star activists voted by 79.3% Tuesday in favor of Conte’s attempt to form a coalition between Five Star and the center-left Democratic Party, an establishment force Five Star had long criticized as corrupt, inept and out of touch.

Five Star party leader Luigi Di Maio announced the result in an appearance at the lower house of parliament in Rome. Leaders of the Democrats said earlier that work on a common program is now completed, following a meeting of the two parties.

Conte could now aim to bring a list of ministers and a government program as soon as possible to President Sergio Mattarella, who gave him a mandate to try to form a government last week.

A new administration could be sworn in later this week, with a first confidence vote in the lower house of parliament by the weekend and in the Senate next week.

Conte will be hoping his second term as premier is quieter and more stable than his first time around, when skirmishes dogged the alliance between Five Star and Matteo Salvini’s rightist League. The Five Star-Democrat coalition is also aiming to turn the page on Salvini’s frequent assaults on the European Commission.

While the outcome of Five Star’s online vote was uncertain, party activists have tended to endorse the party leadership’s decisions in the past. Five Star has long championed direct democracy and regularly consults members on the Rousseau online platform, which has over 115,000 voting members.

A rejection of the alliance with the Democrats would likely have left Mattarella with little choice but to dissolve parliament, triggering general elections possibly in November.

The new administration plans to push through an expansionary 2020 budget and demand a review of European Union fiscal rules, according to a draft program seen by Bloomberg. The 26-point agenda pledges to avert an increase in sales tax that’s due to kick in next year by cutting spending and raising revenue in other areas.

Next year’s budget will also cut taxes on labor and introduce a minimum wage, but it won’t jeopardize public finances, according to the draft dated Tuesday. Avoiding the sales tax hike in 2020 will require finding savings of about 23 billion euros ($25 billion) from elsewhere in the budget.

Just who will steer Italy’s economy has yet to be decided, according to officials from Five Star and the Democrats, who asked not to be named discussing confidential negotiations.

Options for the finance minister post include Salvatore Rossi, former director general of the Bank of Italy, Dario Scannapieco, vice president of the European Investment Bank, and Roberto Gualtieri, a Democrat member of the European Parliament, the officials said.

The draft promises a new tax on internet giants who shift profits out of the countries where they are doing business in order to reduce their liabilities -- a controversial measure introduced by France this year.

Other policies include reviewing highway concessions, cutting the number of lawmakers in the Rome parliament and seeking new EU rules on illegal immigration.

--With assistance from Marco Bertacche.

To contact the reporter on this story: John Follain in Rome at jfollain2@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Jerrold Colten, Richard Bravo

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