By Steve Scherer and Angelo Amante
ROME (Reuters) - Italy's new prime minister promised on Tuesday to bring radical change to the country, including more generous welfare and a crackdown on immigration, as the two party bosses who hold the keys to his anti-establishment government nodded their approval.
Prime Minister Giuseppe Conte addressed the Senate, flanked by the leaders of two formerly fringe parties that shoved aside mainstream groups at an election in March to form a coalition with little-known law expert Conte as its head.
"The truth is that we have created a radical change and we're proud of it," Conte said in his maiden speech to parliament in the upper house Senate, where he was expected to win a confidence vote later in the day.
The coalition, made up of the 5-Star Movement and the League, has a roughly 10-vote majority in the Senate and a wider margin in the lower house, which is due to vote on Wednesday, making the outcome of the ballots a foregone conclusion.
Conte, 53, spoke as 5-Star leader Luigi di Maio and League chief Matteo Salvini sat beside him, nodding their approval as the urbane law professor ticked off all the main elements of a policy agenda the party leaders had finalised days before.
Di Maio is labour and industry minister in Conte's government, and Salvini is interior minister, raising doubt about whether the prime minister, a political novice, can put his own stamp on the government's agenda.
In his 72-minute speech, Conte said priorities would be to address social hardship through the introduction of a universal income - a 5-Star election promise - and to stem an influx of irregular immigrants, a pivotal policy of the League.
NO EURO EXIT
During his speech he made no mention of Italy's commitment to remaining in the euro zone, a question that has troubled financial markets, but he addressed the subject head-on in his final remarks at the end of the parliamentary debate.
"We have to reiterate it - leaving the euro has never been considered and it is not being considered," he said.
The ruling coalition's original pick for economy minister, eurosceptic economist Paolo Savona, was vetoed by the head of state because of his views on the euro. He was replaced by a figure more reassuring for financial markets.
"The political forces that make up this government have been accused of being populist and anti-system...," Conte said.
"If populism means the ruling class listens to the needs of the people ... (and) if anti-system means to aim to introduce a new system, which removes old privileges and encrusted power, well these political forces deserve both these epithets."
Conte is not affiliated to any party, though he is close to 5-Star, which presented him as a potential minister before the March 4 election. Di Maio and Salvini vetoed each other as prime minister and picked him as a compromise figure.
Touching on one of the most sensitive issues for financial markets, Conte said the euro zone's fiscal rules should be "aimed at helping citizens" and that Italy would negotiate changes to EU governance.
Italian government bonds sold off on his remarks, which confirmed much of the coalition's budget-busting agenda. Italy's 10-year government borrowing costs rose 18 basis points to 2.74 percent after hitting a one-week low of 2.509 percent on Monday.
"The speech shows there are no signs that any of their proposals will be watered down," said Antoine Bouvet, an interest-rates strategist with Japanese bank Mizuho.
However, Conte made no reference to one of the most costly of the coalition's pledges: abolishing a 2011 pension reform that raised the retirement age.
In the debate after the speech, ex-premier Mario Monti said Italy risked being put under supervision of the European Central Bank, European Commission and International Monetary Fund unless the government carefully manages public accounts.
Italy already has the biggest debt burden of major euro zone nations at about 130 percent of economic output. Economists estimate the coalition's policy agenda would add tens of billions of euros to annual spending.
"We want to reduce the public debt, but we want to do it by increasing our wealth, not with austerity that, in recent years, has helped to make it grow," Conte said. Debt was "fully sustainable today", and key to reducing it was economic growth.
He also referred to the coalition's promise to introduce a flat income tax, but he gave no details nor a timetable for implementing policies.
Conte stressed that "Europe is our home" and, despite the coalition's plan to improve Russian ties, restated commitments to both NATO and Italy's alliance with the United States.
On immigration, a major election issue after an influx of hundreds of thousands of mostly African asylum seekers, Conte said the government would end "the immigration business".
"We are not and will never be racists. We want procedures that determine refugee status to be certain and speedy, in order to effectively guarantee their (refugee) rights," he said.
League leader Salvini has pledged Italy will no longer be "Europe's refugee camp".
(Additional reporting by Gavin Jones, Crispian Balmer, Philip Pullella, Giuseppe Fonte, Antonio Denti, and Massimiliano Di Giorgio in Rome; Editing by Mark Bendeich/Mark Heinrich)
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Updated Date: Jun 06, 2018 00:07 AM