Italy’s Referendum Explained in Five Simple Steps

UPDATE: Since the publishing of this post the referendum has now been held and Renzi’s reform suggestions have been rejected by the public. Renzi has consequently announced his resignation. We will have more posts here on the potential consequences of this outcome shortly.

During the referendum campaign, Prime Minister Matteo Renzi chose to personalize the referendum by saying that he would resign in the case of a no vote, ultimately linking the results of the referendum to the fate of his own government. While some Italians might vote on how well Renzi performed as a prime minister, the real question is about the constitution and if the proposed reforms are good or bad. Thus, on 4^th December 2016 the Italian people will decide about the following question in a constitutional referendum:

Do you approve the constitutional bill concerning the dispositions to overcome the perfect bicameralism, the reduction of the number of members of the Parliament, the restraint of the institutions’ operating costs, the abolition of CNEL and the revision of Title V of the 2nd part of the Constitution, which was approved by the Parliament and published in the Gazzetta Ufficiale n. 88, on April 15, 2016?

This blogpost will look at the current parliamentary system, the proposed changes, potential outcomes, and state the arguments on both sides.

1) The Problems of Perfect Bicameralism

The core issue that is addressed by the referendum is the perfectly symmetric nature of the Italian parliamentary system where both Houses have exactly the same power. Italy’s system of “perfect bicameralism” was put in place after the post-war era to guarantee minority checks and balances thereby preventing the re-emergence of fascism. Nevertheless, the system has made the Italian government extremely instable, emphasising – rather than mitigating – political factionalism: In the last 70 years, the Italian government has had 63 different governments. Furthermore, each law has to be approved by both houses with the exact same text. Since there is currently no conciliatory mechanism in place that would solve disagreements, laws bounce back and forth between both houses, lengthening the overall legislation process.

2) The Referendum and its Proposed Changes

First, the proposal wants to streamline the legislation process by reducing the number of MPs in the Senate from 315 to 100, making the Senate a House of Regions and Municipalities with only limited and specific legislative powers and no veto power. Therefore the Lower House would effectively remain the primary legislative body.

Secondly, a passing referendum would change the relationship between the local and central government, making the public administration more effective. By clarifying and reducing overlapping competencies, the central government would regain certain important key responsibilities, but also give up control in other areas.

Lastly, there would be some major changes to the electoral law, introducing a new electoral system called “Italicum” that would provide a clear majority to the government with a sizeable majority premium. Under this new system a party that would receive more than 40% of the vote in the first round, would automatically get 55% of the seats. If no party is able to obtain more than 40% of the vote in the first round, the two largest parties would go for a run-off in a second round. In theory the “Italicum” would allow a party to control 55% of the seats and thereby stabilizing the Italian political system. While this electoral law is politically linked to the referendum it is not part of the parliamentary process and therefore the Constitutional Court has to issue an opinion on the proposed changes to the electoral law.

3) Arguments for a “Yes” vote

The proposed reforms could solve key institutional weaknesses in the country and eventually could shift Italy’s parliamentary system closer to that of other European countries. Another prominent argument has been that reducing the numbers of prime ministers in the Senate could yield savings of a maximum of €160M two years after the changes are implemented. Although some of the savings might be offset by the new re-definition activities. Lastly, one could argue that both Italy and Europe need Renzi. Renzi has already delivered some major reforms during his term and there might not be a better alternative. The Five Star Movement by Grillo is seen as a big threat to Italy as well as the European Union.

4) Arguments for a “No” vote

On the contrary side it is argued that the new electoral law itself is not constitutional and too dangerous in a multi-party system with the uprising Five Star radical party. Furthermore, the “no” camp fears that the proposed reforms will eliminate the very important checks and balances on executive power. Lastly, it is argued that proposed reforms are unlikely to address key problems since they could reduce political accountability, actually worsening the situation instead of improving it.

5) Possible Outcomes of the Referendum

If the “yes” camp wins the referendum, Renzi could implement his proposed changes which will eventually strengthen his position and electoral chances at the end of the current term. If the “no” camp would win however, the President of the Republic could either accept or reject Renzi’s resignation. In case he rejects the resignation, Renzi would receive a mandate to form a new government. If the President accepts his resignation the mandate to from a new government will be given to someone else. Whoever receives the mandate will have to form a new government with a majority. Consequentially, some parties might have to broaden their coalition in order to end up with a majority. If many attempts of forming a government fail, there would have to be new elections under the old electoral law. The negative consequences this could have on both the Italian and also European economy could be immense.

UPDATE: Since the publishing of this post the referendum has now been held and Renzi’s reform suggestions have been rejected by the public. Renzi has consequently announced his resignation. We will have more posts here on the potential consequences of this outcome shortly.