Italy austerity plan begins passage through parliament

Italy's austerity plan aimed at warding off a worsening in the euro zone debt crisis goes to parliament today amid a tug-of-war between critics who want to weaken it and those who say it does not go far enough.

The 45.5 billion euro austerity package is designed to achieve budget balance by 2013 in line with demands by the European Central Bank when it agreed to buy Italian government bonds to rein in a steep rise in its borrowing costs.

The government insists that the overall size of the deficit cuts will not change, but ever since the measures were presented in mid-August to a chorus of criticism, debate in Italy has swirled over what amendments should be made in parliament.

Economists were disappointed at the absence of cuts to Italy's costly pension system before 2016 and pensions are expected to be one focus of debate in parliament.

Angelino Alfano, secretary of Prime Minister Silvio Berlusconi's People of Freedom (PDL) party, on Sunday proposed raising the retirement age in exchange for reducing some of the 9 billion euros of cuts in funding to local government.

However, pension cuts are fiercely opposed by Berlusconi's main coalition ally, the pro-devolution Northern League, a position it bluntly reiterated today.

Roberto Calderoli, Minister for Simplification and a prominent League leader, told daily La Stampa that Alfano's attempts were "useless" and "pensions can't be touched".

Mayors from around the country begin a week of protests on Monday against funding cuts they say will hit crucial services. They also oppose plans to merge administration of towns with fewer than 1,000 inhabitants.

Tomorrow, plans for a potentially more damaging protest for the government will be finalised by the country's largest trade union federation, the left-wing CGIL, when it meets to decide the date of a general strike.

The CGIL trade union body is angered by cuts to local and central government, plans to liberalise labour contracts and the lack of measures to tackle tax evasion - which amounts to around 120 billion euros per year.