Newly installed Premier Romano Prodi outlined his government's programme on Thursday, promising to "shake up" the country and reverse the policies of his predecessor Silvio Berlusconi.
In an inaugural speech to the Senate ahead of a crucial confidence vote on Friday, Prodi said Italy needed a "strong jolt" to revive it morally, socially and economically.
"The country is blocked... we must restore enthusiasm... we all want Italy to start winning again," said the former European Commission chief, whose government was sworn into office on Wednesday.
Prodi told senators that Italy was in a "critical state", urging the centre-right opposition to do its bit to set the country back on its feet.
The premier won the narrowest of victories against Berlusconi in the April general election following a campaign seen as the most acrimonious in postwar Italian history. Berlusconi refused to concede defeat, even after the Supreme Court confirmed Prodi's win following a review of disputed ballots.
He has vowed to exploit Prodi's weak parliamentary majority and battle the government at every possible turn. But Prodi insisted there was room for "constructive dialogue" and "agreement" with the opposition, asking that the country's interests prevail over political divisions.
The premier focused on what he termed Italy's "ethical crisis", pledging to clean up the corruption he implied was widespread in society.
Referring to the current soccer match-fixing scandal, he said: "What has happened in the world of soccer shows that we have gone far beyond the limit... For us, probity is the key thing. Italians are expecting change". "We must restore a sense of law and order and civic responsibility... and overcome this climate of tolerance towards morally reprehensible and even illegal types of behaviour," he said.
He stressed he would clamp down on "cunning" tax dodgers in particular, branding tax evasion a "pathological evil".
Italy's underground economy is believed to equal almost 30% of the country's GDP, a figure which Prodi said was without comparison in the Western world.
Prodi went on to talk about the country's stalled economy and his proposals for kick-starting growth and consolidating deteriorating public ccounts.
Over the past five years, Italian GDP growth hasaveraged less than 0.7% a year while the country's debtmountain - the third biggest in the world - is on the rise again and has been forecast to hit 107.4% of GDP this year. Prodi said his cure included a 5% cut in payroll taxes and social security contributions paid by businesses and workers; greater market liberalisation; more investment in research, development and infrastructure; and the promotion of stable employment rather than short-term contracts which he said created an "unacceptable level of precariousness".
On the public accounts front, he ruled out a mini-budget but said he would immediately set about cutting public spending and reducing the budget deficit.
Prodi has won plaudits for picking Tommaso Padoa Schioppa as his economy and treasury minister. Most experts agree the European Central Bank charter board member is an ideal choice to boost confidence in Italy's ability to fix its finances and boost its stagnant economy.
On the social policy side, Prodi renewed his commitment to increasing child benefits and the number of kindergartens. He also promised to overhaul the centre right's immigration law, revise the immigrant quota system and grant citizenship to long-time immigrant residents.
The premier also promised "tough" new conflict of interest legislation and a reform of media regulatory bodies. Such reforms would be firmly opposed by Berlusconi, a billionaire media magnate who was dogged by conflict of interest accusations.
In another sideswipe at his adversary, Prodi said his government would "protect and guarantee the independence of the magistrature" and improve the trial system. Berlusconi was repeatedly accused of passing laws aimed at easing his legal woes and undermining the independence of
the judiciary, charges which he has always denied. In another departure from centre-right positions, Prodi blasted the Iraq war and "occupation" as a "grave error" and said Italian troops would be pulled out of Iraq.
While promising close ties with the United States, Prodi stressed his commitment to increasing European "strength and unity".
The premier also said he planned to overturn Berlusconi's electoral reform law which returned the country to full proportional representation.
The reform has left Prodi more exposed to the demands of smaller parties in his nine-way coalition which ranges from Communists and anti-clericalists to staunch Catholics. The opposition accused Prodi afterwards of attempting to undo all its reforms. It also said his parliamentary majority was far too weak to push through his ambitious reform agenda.
Prodi has a relatively strong hold over the House but a majority of only two seats in the Senate.
