31 march 2011

Prime Minister Vladimir Putin chairs a Government Presidium meeting

In his remarks at the meeting of the Government Presidium, Prime Minister Putin drew the focus to two issues - healthcare modernisation and the need to create a council for coordinating the development of the transport system of St Petersburg and the Leningrad Region. "Our goal is to effectively develop the transport systems of St Petersburg and Moscow, eliminating imbalances that have recently become evident and making people's lives more comfortable," said the prime minister.

Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, ladies and gentlemen.

Let's share the latest data. On April 1, pensions and one-time payments to citizens will be indexed. Pensions will increase by between 400 and 800 roubles for different categories of pensioners.

Ms Golikova (addressing Tatyana Golikova, Minister of Healthcare and Social Development), will you please brief us on this issue.

Tatyana Golikova: Mr Prime Minister, colleagues.

Following the adoption of the law to adjust pensions for inflation on April 1, social pensions will increase for 4 million Russians. Speaking about social pensions, 2.7 million people receive this type of pension today, which currently stands at 4,728 roubles on average and will be adjusted up to 5,214 roubles. Citizens entitled to this type of pension include disabled children, adults disabled since childhood, the elderly and people with all types of disabilities that worked but did not spend the necessary time in employment. Other eligible groups are orphans and children who lost a parent, who are not eligible for retirement pensions, and men over 55 and women older than 50 from indigenous groups of the North.

Along with social pensions, the law also entails an adjustment for government pensions for veterans of the Great Patriotic War, for citizens injured in radiation-related and industrial catastrophes, for enlisted service members who became disabled while performing their military service duties, for citizens awarded the badge Survivor of the Siege of Leningrad as well as to the families of the aforementioned citizens. As you said, they will see a greater increase because the average size of their pensions is larger than that for other categories of citizens. For example, veterans of the Great Patriotic War who fall into this category – there are 253,700 of them – will on average be receiving a pension of 20,994 roubles, which is 793 roubles more than what they currently receive.

This law also provides for an increase for citizens who are eligible for the so-called additional financial support allowance. Since April 1, 2011, the average size of this allowance will be increased by 984 roubles. This allowance paid in addition to the pension will amount to 10,571 roubles. This allowance is paid to citizens who have done some special service to the country and who are entitled to it by direct presidential decree.

Now about one-time payments: they will be indexed by 6.5% on April 1. This is the level of increase in consumer prices identified for 2011 in Article 1 of our budget. As of today, 16.656 million Russians are eligible for this payment. Primarily, these are people with all types of disabilities of whom there are 12.533 million. Correspondingly, the size of the monthly payment depends on what social benefits they were receiving until benefits were monetised. For example, veterans currently receive a monthly payment of between 1,019 and 3,396 roubles. After the adjustment, they will be receiving between 1,086 and 3,617 roubles.

I would also like to add that these payments are distributed concurrently with pensions. This is why the Pension Fund has completed all the necessary calculations and will be making these payments according to schedule starting April 1.

Going back to pensions, I would like to add that they will require 2 billion roubles. That makes 20 billion roubles by the end of the year. This means that we remain within the limits set for the Pension Fund budget. This indexation will not require any additional funds. One-time payments have also been planned and will not require any additional allocations either. So, all the necessary funds are available and everything will be done on schedule.

Vladimir Putin: Mr Serdyukov (addressing Anatoly Serdyukov, Defence Minister), indexation of monetary allowance to servicemen is also planned for April 1, isn't it? Is the Ministry of Defence ready?

Anatoly Serdyukov: Yes, we are ready.

Vladimir Putin: By the way, many of us present here discussed a very important issue related to decreasing social taxes and charges at yesterday's meeting of the modernisation commission. We all know how sensitive this issue is. We had to increase social charges in order to finance Russia's pension system due to the significant increase in pensions last year. These charges were increased in view of the healthcare modernisation we are starting this year – we will discuss it later – that entails purchasing new equipment, overhauling facilities and raising salaries for medical staff.

Naturally, these funds – between 400 and 800 billion roubles – may leave a surplus depending on our decisions. They will help us balance out the budget or resolve other issues and challenges facing the government and the budget. I'm referring to increasing wages in law enforcement agencies, above all in the Ministry of the Interior, to significantly raising military service pay and to the new state defence order of 20 trillion roubles planned for the next few years, a huge amount for this country.

There is another issue related to the new state armaments programme. I'm speaking about funding the defence industry modernisation. This requires a lot of money. Those funds helped us balance out all these spending obligations. However, we all know that an increase in social charges will result in serious problems of an objective character for businesses. And we are aware of this. The statistics and assessments of economic conditions indicate that this is a complicated task, but we need to address it. The question is how to solve it. And I would like to draw your attention to that.

There are no simple straight-forward solutions for this issue. We cannot take this burden from businesses and put it on regular citizens. For example, a direct one-time increase in excise taxes on alcohol beverages and tobacco will definitely result in a sharp increase in the prices of these goods. You know what I think of the spread of alcohol consumption in our society – we need to counteract this trend, but there aren't any simple solutions. We need a set of measures. Raising excise taxes and prices of alcohol is not the only way, and not the primary way, to solve this problem. We need to promote healthy lifestyles and develop sports and physical fitness. For this, we need to invest in the construction of new sports facilities. We also need to give greater attention to education and create a culture that encourages people to cultivate healthy lifestyles, above all to divert young people from drinking or smoking. A set of measures will be needed that will require time and money. I'd like you to bear this in mind. I would like to emphasise that this is a serious problem and it needs to be addressed in earnest. But I will also suggest that you avoid simple straight-forward solutions. We need to consider this problem carefully, responsibly and professionally.

This was a remark to our meeting today. But please, recall that we have been discussing this issue with you for a long time and specific proposals were made a month or two ago. Let's review them once again and consider various solutions without any fuss.

Mr Levitin (addressing Igor Levitin, Minister of Transport), would you please brief us on the renewal of government subsidies for flights to Russia's Far East and other distant destinations. Airlines are restarting this programme on April 1. Please, tell us about it. If I'm not mistaken, the programme includes 30 flight routes from St Petersburg, Moscow, and Sochi to the Far East and other distant cities and towns. Please.

Igor Levitin: Mr Putin, colleagues.

On April 1, the programme to subsidise air travel will be renewed. As of March 31, contracts with twelve air carriers have been signed. Last year ten companies took part in the programme, so we see that there is real competition for passengers.

We expect that 360,000 people will use the subsidised fares this year, and 50,000 subsidised tickets have already been sold. The programme is being expanded. In its first year it included 18 routes, last year it featured 26 routes and this year it has 30 flight routes.

The four new routes have connected Moscow with Ulan-Ude and Chita and Norilsk with Sochi and St Petersburg. The programme will run from April 1 to October 31.

This programme has helped increase the volume of transport in the Far Eastern Federal District. It grew by 28% in Yakutia and by 11.5% in the Far East. I’d also like to note that families with children under 12 years old can benefit from additional discounts.

A similar programme is underway in the Kaliningrad Region. There are five airlines operating there, and the cost of a ticket is almost equal to the cost of a (rail) ticket in a sleeping carriage. We believe this programme can boost transport in the Kaliningrad Region.

Vladimir Putin: Good. But I’d like to return to the previous subject. I have recently raised this issue with Minister Golikova… We are well aware that a sharp increase in excise duties will not lower alcohol abuse, but only lead to an increase in the consumption of homemade vodka and other substitutes. That’s what the result will be.

I am asking the Ministry of Finance and the Ministry of Economic Development to pay special attention to another problem – we cannot offset a shortfall in revenue exclusively with oil and gas revenues. We may have them today, but tomorrow the situation may change. We need sustainable sources of revenue. We all understand that government spending will increase every year, which is why, I reiterate, we need to find a forward-looking and professional solution.

Ms Skrynnik, please. What is the status of fodder supplies to regions?

Yelena Skrynnik: Mr Prime Minister, we are making all the necessary preparations to start providing grain from the intervention fund without auction, as required by the government resolution that you signed. There are 224 grain elevators currently being used.

The price has already been determined. The government resolution sets the fodder price for wheat at 4,550 roubles, whereas the market price is 6,500 roubles. Barley will be traded at 4,200 roubles, whereas its average market price is 8,500 roubles. So, as you can see, agricultural enterprises will receive substantial support.

Tomorrow we will sign the remaining agreements with the regions on supplies of grain from the intervention fund. Everything is going as planned.

Next, we have set quotas on grain supplies to each region, taking into account their requests and other criteria. In their turn, the regions are drawing up lists of grain recipients, per your instructions, so as to make it clear who will receive grain and how it will be used. This work is proceeding on schedule and in accordance with the pertinent regulations.

Vladimir Putin: Good. How many agreements have been concluded so far?

Yelena Skrynnik: Sixteen agreements were signed as of this morning and thirty by evening. The rest of the regions have confirmed their intent, and tomorrow we will sign agreements with them, too.

Vladimir Putin: Good. Mr Zubkov, has this measure had any effect on the market – on prices?

Victor Zubkov: Yes, Ms Skrynnik has already said that the price is falling – not drastically, but gradually. Recently, it reached 6,500 roubles per metric tonne, getting down from 7,500 or 8,000. Everything is going as planned. A series of government measures, including a ban on grain export, support for regions that do not produce grain, and the supply of fodder in the amount of 2.3 million metric tonnes that are about to be shipped to the regions, makes it possible to maintain a fair market price – not too high and not too low. It is 30 to 40% lower than the international market price. This shows that the government measures have helped stabilise the food market.

Moreover, through the agreements that Minister Skrynnik has just reported on, the regions have committed themselves to controlling the prices of locally manufactured products, including the basic staples of the consumer basket.

We believe that these measures are timely and will help us keep the situation under control.

Vladimir Putin: Has the Antimonopoly Service registered any (price) reduction? Has the situation really become more stable?

Igor Artemyev (head of the Federal Antimonopoly Service): Mr Prime Minister, we will continue to audit grain elevator companies involved in the supply chain in order to verify that, for example, additional transport costs do not compromise the effect of these government measures. We are working in close contact with regional authorities to avert competitive action and economic separatism. Overall, the situation is normal, but we have already started several proceedings as a result of violations. But, I reiterate, on the whole, everything is going…

Vladimir Putin: What about fuel and lubricants?

Igor Artemyev: The situation is also stable on this market. Almost all decisions taken on February 9 have been fulfilled. We had to start over thirty proceedings on violations in regional markets. This is in addition to current federal proceedings. These measures stabilised prices in almost all regions.

Vladimir Putin: Thank you. Please continue to monitor the situation and avert possible shortfalls.

Sergei Ivanov: The aviation and kerosene prices are also quite stable…

Vladimir Putin: Good. We have concluded eighty-two agreements with the regions to provide federal budget funds for repairs in public courtyards. How is this work going?

Viktor Basargin: Mr Prime Minister, it’s the first time in history that the government has made a decision to allocate funds for the repair of courtyards and for the maintenance of roads in residential areas. We will allot a total of 22.7 billion roubles from the federal budget for these purposes. The regions will provide another 4 billion roubles, which makes over 27 billion roubles in total.

We have developed the pertinent federal legislation. As you have just said, eighty-two agreements have been concluded. We also drew up a schedule, and the regions are keeping to it. All the documents have been signed. As of March 31, this 22.7 billion roubles has been disbursed to regional budgets. These funds will be used to conduct major repairs on 19,468 courtyards and 8,112 roads in residential areas, improving the local quality of life. Given that these are seasonal works, the agreements stipulate that they must be started no later than June 1. At the end of the year, we will sum up the results of this work and make a report on it.

Vladimir Putin: You’ve made an important point. Our goal is not just to allocate money to the regions but to improve the infrastructures and environments of residential areas where ordinary people live. And we should be permanently monitoring this situation. I would like you to regularly inform me on the progress being made.

Now I’d like to say a few words about this meeting’s agenda. As you know, we are embarking on [multiple] healthcare modernisation programmes, through which we need to purchase over 100,000 items of medical equipment for Russian clinics and hospitals. These include about 1,400 different kinds of equipment. The regions will receive 460 billion roubles through healthcare modernisation programmes, 100 billion of which will go towards purchasing medical equipment. As I have reiterated more than once, this money should be used in the most effective manner possible.

Here’s what I would like to draw your attention to. Yesterday I discussed this with some of you behind closed doors, and now I’d like to return to some of the main points.

First, we must purchase only advanced, quality and high-tech equipment if we really want to expand the capabilities of clinics and hospitals. There should be no room for obsolete or low-quality equipment. We must meet the two-year schedule [we set] and purchase equipment without delay so that patients can start benefitting from it as soon as possible. And, certainly, it is necessary to oversee the entire chain of distribution: delivery, assembly, warranty services, expendable supplies, and personnel training and retraining. I believe that suppliers must feel responsibility for their equipment throughout its service life.

The second aspect of this issue is the need to make prices fair and comprehensible in order to avoid situations in which the price of the same equipment significantly varies according to the region. We discussed this issue at our March 11 meeting in Ryazan.

Third, we need to set up an effective procurement system, working directly with manufacturers whenever possible. I’m aware that they prefer to trade through dealers. But we need to purchase from dealers certified by manufacturers. And, clearly, we must eliminate corruption and collusions in the market.

Fourth, I have already mentioned that we are allocating 100 billion roubles for the procurement of equipment. This money must also be used to modernise Russian manufacturing industries. Through regional healthcare modernisation programmes, manufacturing companies will receive additional orders and, as a result, extra funds for their further development.

So far, Russian-produced medical equipment accounts for only 11% of the total being procured. I expect this share to increase to 50% by at least 2020. Clearly, this cannot happen overnight. But in any case, we must provide support for our companies. This is the main goal of the federal targeted programme for the pharmaceutical and medical industries.

We have made a decision to allocate 40 billion roubles to the production of modern medical equipment. As I said, it takes time to modernise the industry and adopt advanced technology. But many Russian companies already manufacture competitive equipment, and we certainly need to purchase it so that its share in these programmes is sufficiently large.

At the same time, for objective reasons, we will have to purchase a significant share of medical equipment from international manufacturers. And we should use even this situation to its highest possible benefit as we discussed yesterday. I believe that procurement contracts with international companies should include clauses stipulating that they will open new production facilities in Russia and concentrate production in one place to the maximum possible extent, as is done in other industries – for example, the auto industry. Incidentally, leading international pharmaceutical corporations are already entering our market, bringing with them investments and new technology. Take Sanofi-Aventis, Novartis, and Nycomed, for example, which are implementing projects in the Orel, Kaluga, and Yaroslavl regions with the help of local authorities.

In order to create a clear and transparent procurement system, we will need to amend the current legislation. All necessary drafts have been drawn up already. We need to review them today and introduce them to the State Duma. Incidentally, as for technical regulations in construction, or to be more precise, major repairs, I am asking the Ministry of Regional Development to introduce amendments to the pertinent legal act as soon as possible. And I would also like the Duma to get involved and pass these bills without delay. This should be done over the next few weeks. We cannot lose momentum on this programme. If we do, then everything will be put off until the end of the year, and we will either fail to fulfil our plans for 2011 or they will be badly delayed.

There is one more issue on our agenda. Today we are to consider the creation of a council for coordinating the development of the transport systems of St Petersburg and the Leningrad Region.

I’d like to remind you that in early February, the government made a decision to form a similar council for Moscow and the Moscow Region. On the whole, Moscow and St Petersburg are facing similar problems – in particular, traffic congestion and a lack of coherence and coordination between urban and suburban transport systems. This results in wasted time, exacerbated environmental problems, and has a negative influence on people’s health; most importantly, it has an impact on the quality of life of the people living in these cities and is a source of chronic problems and discomfort for them. St Petersburg and Moscow have already adopted action plans to ease the burden on their transport systems.

Several large-scale investment programmes are already underway. The ring road around St Petersburg is almost completed. The project for the Western High-Speed Diameter is ongoing. Moscow is rebuilding Leningradsky Avenue and planning to build additional interchanges, as well as widen the main highways connecting the city with the Moscow Region. Clearly, we need a comprehensive strategy to resolve the problems faced by St Petersburg and Moscow as transport hubs. Each needs its own development strategy, with investment plans of the regional and federal governments that will require rigorous coordination. These problems should be addressed primarily by Moscow, St Petersburg, and the Moscow and Leningrad regions. But at the same time, they are very acute and require the federal government’s involvement. This is the main objective of the coordination councils for Moscow and St Petersburg that we are creating.

I’d like to reiterate once again that our goal is to effectively develop the transport systems of St Petersburg and Moscow, eliminating imbalances that have recently become evident and making people’s lives more comfortable.

Let’s get down to work.

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