30 june 2011

Prime Minister Vladimir Putin meets with Sverdlovsk Governor Alexander Misharin

The prime minister and the governor focused their attention on social issues, particularly regional wages in such fields as education and culture, and the construction and reconstruction of kindergartens. Mr Misharin then gave a detailed report on housing construction, including new housing for young families. During their discussion of healthcare modernisation, Mr Putin insisted that the utmost attention be paid to the provision of healthcare services in rural areas.

Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, Mr Misharin. Thank you for your help in organising today’s events. We are here to discuss the Sverdlovsk Region. Incidentally, I have seen the city. It is developing well – of course, not only through your own efforts. Perhaps previous mayors and regional governors did even more for it. At any rate, it’s a pleasant sight – a modern city with developed infrastructure and interesting architecture. I remember the first time I came here. It was a large city even then, but it left an impression of stolid provincialism. Now it’s changing, and it’s nice to see. What about the general economic situation in the region?

Alexander Misharin: Mr Putin, I would like to begin by thanking you for appointing our city as the venue for today’s conference. It really matters to us. The issues that we considered today constitute, in essence, a thorough plan of action, parts of which we are implementing even now.

We have coped with the economic crisis entirely. Our economy reached the pre-crisis level as early as last year, with the gross regional product exceeding a trillion roubles, and we expect 1.2 trillion this year, with a growth rate of 8.7%, almost twice the national average.

Vladimir Putin: Yes, of course.

Alexander Misharin: Unemployment is back to the norm, that is, to the level of the fourth quarter of 2008. As I told you, we had bad wage problems during the crisis and lagged behind the national average. As you said last year…

Vladimir Putin: An industrial area is always hit the hardest.

Alexander Misharin: Precisely. We expect that this year, we will reach… I mean, the average monthly wage in the region is presently 20,792 roubles, with 13% growth over four months. Real wages are also growing. An average wage of 23,000 roubles is our target for the year.

Importantly, we have started to adjust public sector salaries to the inflation rate. As of September 1 of last year, we increased teachers’ salaries by 10% and those of all public servants by 7%. This year, we performed a general indexation of 6.5% on June 1, to be followed by another 30% on September 1 for all school, preschool, and continuing education teachers.

Vladimir Putin: You are quite right to extend the indexation to preschool and continuing education.

Alexander Misharin: A teacher presently makes 16,765 roubles a month.

Vladimir Putin: And what will their salaries be starting September 1?

Alexander Misharin: The average salary will be 21,700 roubles.

Vladimir Putin: And the regional average?

Alexander Misharin: It will be 23,000. But I think the two will roughly coincide following another raise next year. A majority of teachers will earn even more from extra classes and seniority bonuses. Teachers can’t usually make do simply by fulfilling their quotas.

Vladimir Putin: But we should not base our calculations on bonuses and work on the side.

Alexander Misharin: I understand, but average wages will be higher still. First, we will increase these bonuses by 30%...

Vladimir Putin: Be that as it may, you should raise teacher salaries to match the average for the entire regional economy next year.

Alexander Misharin: We will. We also increased the salaries of librarians and other cultural workers by 30% – they were miserable before.

Vladimir Putin: You’re right.

Alexander Misharin: You may ask how we afforded it. We are increasing regional budget revenues. There was a 23% rise last year, and we expect roughly the same figure this year. We plan to have a 165 billion rouble consolidated budget, so we can afford another indexation with new amendments to allocate an additional 20 billion for that purpose. The budget is largely socially oriented, with 70% of expenditures allocated to social welfare. However, only 9% of the budget is comprised of investment. That is not enough for such a region as ours, so we have drawn up regional targeted programmes into which 60% of all private investment will be channelled this year. We also fully hold up our end in co-funding federal targeted programmes.

Vladimir Putin: Where do the investments go, first of all?

Alexander Misharin: To road and housing construction and the modernisation of public utilities. Investors also finance comprehensive urban development whenever necessary, including a kindergarten programme. It envisages the creation of 49,000 places for children in preschool educational establishments within three and a half years.

Vladimir Putin: Will these be new facilities?

Alexander Misharin: Not entirely. There are three sources, in fact. First, we will create another 13,000 places through post-compaction.

Vladimir Putin: Mind that the kindergartens are not full to the gills with kids.

Alexander Misharin: No, we will just raise the capacity back to where it once was. Another 14,000 places will result from the reconstruction of old facilities and their return to use. About a third of all kindergartens currently accommodate other offices. We are reinstating them after their reconstruction. New facilities will account for over 20,000 places. We intend to build 32 new kindergartens, and reconstruct and commission another fifty. I heard the figures today. We have earmarked 600,000 roubles per child, though we also started with the figure of a million roubles. That was the estimate when I saw it for the first time. However, feasibility studies showed that we could do it with 600,000 roubles. I think further cost reduction is possible in large-scale construction.

Vladimir Putin: You can certainly save at least 100,000 roubles per place.

Alexander Misharin: It might be even more, I think. But for that, we need state-of-the-art construction technology, which we are already using. I think it is quite right to boost housing construction. We commissioned 1.77 million sq m of housing last year, and we plan to build another two million sq m this year. The economic downturn did not affect our construction industry. We maintained the pre-crisis level in 2009 and even managed a small margin of growth in 2010. According to our socio-economic development programme for the period up to 2015, we will build 3 million sq m by that year, and a total of 12 million sq m in five years’ time. Low-rise housing will account for 60% of total construction. Affordable housing also matters…

Vladimir Putin: Have you got a programme for the support of young families?

Alexander Misharin: Yes. That is why we have several different housing construction programmes. One concerns young families, another is for families with multiple children, and yet another envisages support for public servants who are paying for the construction of their own homes. We subsidise 20% of the costs of every 18 sq m per inhabitant. The price ceiling is 30,000 roubles per sq m in Yekaterinburg and even lower in the region. We have also made an agreement with Sberbank for a long-term credit line at 9% annual interest, established for this purpose. So mortgage loans have the most generous possible terms.

Vladimir Putin: Is Sberbank granting you 9% mortgage interest?

Alexander Misharin: Yes, on its credit line.

Vladimir Putin: Under your guarantee?

Alexander Misharin: No. It’s even cheaper with the guarantee of the regional administration, but there’s a waiting list for them. Our guarantees facilitate 9 billion roubles a year for investment into comprehensive urban development, housing construction, and so on. A million sq m of housing was built last year in Yekaterinburg. That’s an absolute record even for the Soviet years – I mean, that kind of volume has never been seen, even in the Soviet Union. Akademichesky neighbourhood is especially noteworthy, with 260,000 sq m. Renova-Stroigroup is developing it comprehensively. A kindergarten is also being built there.

Vladimir Putin: Are you building by neighbourhood?

Alexander Misharin: Yes. I have mentioned only one.

Vladimir Putin: Is construction well underway?

Alexander Misharin: Yes, 260,000 sq m was commissioned last year, and a similar amount is being commissioned now. The neighbourhood population is already 25,000.

Vladimir Putin: So it will be quite a large neighbourhood?

Alexander Misharin: Yes, we are making room for a population of 300,000. The new houses will use 30% less heat and electricity than the city average. The residents of Akademichesky pay rent and utilities fees according to last year’s rates, though tariffs have been increased. The savings are due to energy efficiency. It’s a good model.

There are many interesting innovations there – suffice it to mention a sophisticated security system in which every resident possesses a special access card and an emergency phone. Every building is under video surveillance, and security services keep an eye on the neighbourhood. There has not been a single burglary or act of vandalism there.

Vladimir Putin: Have you adopted a regional programme to modernise healthcare?

Alexander Misharin: Yes. It’s a two-year programme. Thank you for the 16.5 billion rouble grant. We have 130 facilities to repair and more than a thousand items of high-tech equipment to purchase, including 64 full-body scanners.

Vladimir Putin: Do you keep rural healthcare in mind?

Alexander Misharin: Yes, according to our plan, people are entitled to the same high standards of healthcare wherever they live. That is why we have disease prevention programmes in rural areas. Inter-municipal hospitals come in with high-tech services when municipal ones can’t cope. The programme is working well already.