“The origin of the Superbonus 110 problem? It was supposed to last for a year…” Gazzetta di Reggio

A fantastic 110% chance to revive the economy after the pandemic, or a completely wrong path that has resulted in the only advantage being a catastrophic hole in the public accounts? Certainly, among the countless bonuses existing in our country, those that allowed the implementation of works to improve the energy efficiency of private homes (with an increase to the state treasury exceeding one tenth of the cost incurred) represented a maximum.

The cost to the treasury cannot yet be accurately measured (ranging between $100 and $200 billion at the end of the race), with the benefit limited to only 4% of civilian homes. With Luigi Gieso, Professor of Family Finance at the Einaudi Institute, and former Professor at the Universities of Sassari, Rome “Tor Vergata”, at the European University Institute and the University of Chicago and at the Research Service of the Bank of Italy, we talk about super-rewards and virtuous remuneration policies, which should not be demonised.

Professor, in the post-pandemic scenario, were we a school case, or did other countries apply similar methods?

“All countries, especially in times of crisis, resort to support policies. The US government intervened to combat the effects of Covid on the economy by injecting liquidity directly into households, in very large quantities (more than $1 trillion, ed.). Bonuses are one of the tools for managing the economic cycle. We should not be surprised by its use. They are also used because there are equally sensitive political cycles. Over the past decades, governments close to elections have also used bonuses, income supports, and subsidies to purchase goods to build consensus. Let's take note of that.”

But maybe this is the whole bonus policy, the list is so long, from income support to taps, from cars to curtains, that we have to think again.

“To simplify things, bonuses have an economic reason. It is often accompanied by political distortion. The multiplicity and fragmentation of the rewards is a good measure of the importance of this distortion-turned-pathology: the pooling of potential votes and electoral support from different types of voters. “It's clearly causing problems for public finances.”

So, is the 110% super bonus just the tip of the iceberg? Is it the most emblematic symbol of what should not have been done? Or does it still contain positive elements?

“The super bonus made sense when faced with the post-pandemic crisis. At that time, there was great uncertainty about the future, economies were stalling, many sectors were at a standstill, and the risk of recession was greater than at present. In this climate, supporting the recovery made sense. Others did too. I return to the example of the United States, where the federal government provided money to everyone, even if in excessive ways. The superbonus had interesting properties: in principle, it was a powerful tool because construction could have large impacts on the entire economy, stimulate many sectors, and have a large cyclical effect. Superbonus was also useful because it aimed for energy efficiency. “It made sense.”

But something went wrong, or rather a lot. Let us list just some of the problems: high costs to the public treasury, limited interventions, skyrocketing raw material costs, and cases of irregularities running into nine figures. The list is long. There are those who say that the super reward will thwart the recovery process

“The super bonus has two negative elements that could and should have been foreseen, and a third element that could not have been foreseen. The first applies to all public finance interventions to support a cyclical recovery: they must be long-term. One or two years at most in extreme circumstances.” The second problem is no less important. The goal of Superbonus was to help the economy recover. He succeeded in giving breath to the sector that had been suffering from a serious crisis since 2008. But he claimed that he uses this tool to manage energy efficiency. But this concerns the housing stock “With such a onerous bonus, a maximum of 3 or 4 percent of private homes would become more efficient. This data was the driving force behind the extension.” The third element that was not expected? “A reward that attracts a lot of people is inherently a harbinger of deep consensus. Its extension, although moderate, was not surprising.”

There are two other aspects: the contribution of the Superbonus system to increased raw material costs and fraud.

“On the first side, it must be said that the exit from the pandemic created tensions over the supply of all raw materials, which led to the obstruction of many productions. By fueling demand, the superbonus amplified the effects on material prices. A demand-side shock was expected when supply was tight. Regarding scams, I know they are the subject of criticism and they bring in a lot of money. But from the point of view of evaluating the action, this is not the main flaw… The point is that the super bonus should have remained active for a year, no more.

But was choosing the discount on the bill and the intervention of financial brokerage companies and financial banks obligatory, or could something else have been done?

“If you want to activate a support procedure with a quick response, the fact of being able to deduct support through an intermediary helps because many users do not have the possibility to provide funds. The pivotal point, he insisted, was that the super bonus was supposed to last for one year. And then setting a maximum limit on the cost of public finances.”

Now we are moving towards a gradual lockdown.

“The government has no alternatives. It is the right path and there is no escape from it. These loopholes cannot be left open.” And what undesirable effects will it have on our calculations? “It is impossible to evaluate the legacy of the super bonus in the short term, except for macro indicators. It takes time. But I believe that this experiment will have implications for policies supporting energy efficiency “.

© All rights reserved