* Emergency decree follows wave of scandals
* Audit court to check, monitor local govt budgets
* Decree raises sanctions for financial mismanagement
ROME, Oct 4 (Reuters) - Italy's cabinet approved emergency
legislation on Thursday to rein in the spending of regions and
provinces and avoid any repetition of recent financial scandals
involving local government.
In one such incident, which came to light last week,
police seized documents related to expense claims at the
regional government of Piedmont and on Wednesday the head and
four employees of a tax collection agency were arrested for
allegedly pocketing some 100 million euros ($130 million) of the
money they had gathered.
These and other scandals "are part of an old Italy that we
would prefer not to see any more", Prime Minister Mario Monti
said, adding that he was worried by the "incalculable damage"
such disclosures did to Italy's image abroad.
Italy's regions, which control major areas of spending
including health, are under scrutiny as Monti's government tries
to enforce spending cuts to ease one of the major debt crises
afflicting the euro zone.
The cabinet decree, which must be approved by parliament
within 60 days, rules that regional governments will have to get
prior approval for their budget plans from the country's audit
court, a panel of magistrates that oversees public spending.
The court will also carry out quarterly checks into the
region's finances.
The government last month sharply hiked its budget deficit
and debt forecasts for this year and next despite the painful
austerity measures adopted, and regional government spending is
considered among the most difficult areas to control.
Spending by the regions has increased by 75 percent in the
last decade due to budgetary management which is often "opaque,
inefficient and economically unsustainable", the prime
minister's office said in a document after the cabinet meeting.
Monti's unelected cabinet of technocrats which took office
almost a year ago has governed with far more sobriety than his
scandal-plagued predecessor Silvio Berlusconi, but at the local
level waste and corruption have continued to prosper.
"We are trying to put an end to the waste of public money
and limit the growing and worrying public disaffection towards
politicians," Monti said at a news conference.
"After the unspeakable episodes that have happened Italians
are indignant that heavy sacrifices are asked of them while the
world of politics seems exempt."
The president of the regional government of Lazio resigned
last month over a case involving embezzlement of party funds and
members of the Campania, Lombardy and Calabria governments are
also under investigation for misuse of public money.
"OLD ITALY"
The government decree says that local government politicians
found guilty of financial mismanagement will be barred from
political office for 10 years and will face heavy fines.
To improve fiscal discipline, the legislation blocks
discretionary spending by local government bodies whose budgets
are off target and increases their scope to raise taxes.
In addition, the salaries and benefits of local politicians
will be set at the level of those currently offered in the most
"virtuous", or least generous, regions.
Economy Minister Vittorio Grilli said an estimate of the
savings that the new rules would achieve would be included in
the government's multi-year budget, or "Stability Law", to be
presented on Oct. 9.
Earlier on Thursday the cabinet approved legislation to
promote digital technology in the public administration, reduce
red tape for start-ups and offer tax breaks for companies
embarking on major infrastructure projects.
($1 = 0.7689 euros)
(Writing by Gavin Jones; Editing by Michael Roddy)
