29 november 2012

Meeting of the Government


Transcript of the beginning of the meeting:

Dmitry Medvedev: Colleagues, I would like to start today’s meeting by evaluating our achievements of the past six months. Although six months is not a very long time period, it is still long enough to see what’s happening and to judge progress made on our seven high-priority tasks, which I set during our first meeting in this auditorium. I would like to remind you that a six-month evaluation period was stipulated at that time.

First, let’s discuss economic matters. On the whole, the situation is normal. Russia has continued to develop and posted impressive results in light of the global market situation. The macroeconomic situation remains stable, especially against the backdrop of the substantial problems in the European and global economies. Certainly, we must keep this in mind. Judging by the latest statistics, GDP grew by 3.7% from January through October 2012 relative to the same period in 2011. Industrial output has increased by 2.8%. Fixed capital investment has increased by over 9%, beating predictions. Unemployment continues to fall, and this is cause for celebration. The current unemployment rate, calculated using International Labour Organisation (ILO) methods, is about 5.3%, or about four million people. There were 6.4 million unemployed people in October 2011. This is a clear, positive trend. There were about 1,998,000 officially registered unemployed individuals in October 2012.

As for inflation, the situation is manageable but not ideal. We posted 5.6% inflation in the first ten months of 2012. This exceeds 2011 inflation, which had totalled 5.2%. We know the causes of this, including the situation in the agricultural market, or crop failure. We must work hard to eliminate possible causes.

Real wages grew by by 3.5%, another positive trend. In addition, almost 1.5 million children were born in January-September 2012. Of course, this is a good development. This means that we are moving in the right direction here. Natural population increase has been recorded in the past few months. The natural population increase in September 2012, which totalled 11,500 people, exceeded that of September 2011 almost three-fold. These are good indicators. In fact, they are key indicators.

And now I will speak about the seven priorities I have formulated for the Government in the coming period. Firstly, we must adopt state programmes. I believe that their importance is evident to everyone. Their adoption turned out to be a difficult process, but the main thing is that these state programmes are systemic instruments. They provide not only for additional budget funding, but also for renewal of legislation, formulation of new rules, introduction of new technologies in many different spheres, a comprehensive answer to major economic and social challenges that are facing the country, and the opportunity to minimise existing risks and to use our competitive advantages to the best of our ability.

Secondly, these programmes serve as our guidelines for the long-term perspective, until 2020. To put it bluntly, we must have a clear view of our goals, a clear view of the policy that we are implementing, because we are often asked many questions about our policy and our actions. The reason behind this is usually a lack of information or an unwillingness to immerse oneself in a problem. Well, these programmes provide answers to these questions. By the way, I’d like to say that I don’t see anything odd in the fact that we are discussing and preparing part of the programmes in their standard, limited versions, that we are also discussing them in an extended version, bearing in mind that there could be additional sources of funding, which would allow us to implement an extended version.

Thirdly, there is an opportunity to consolidate resources, to use a system of indices to correctly assess the efficiency of investment and to increase the transparency of our expenditures. The drafting of programmes is not a simple matter. The proposed solutions do not always satisfy all participants in discussions, which is logical. These programmes are discussed at interdepartmental meetings and on expert platforms. We search for solutions that involve compromise, we debate relevant issues at Government meetings, and we will likely have a debate today too, because there are several programmes on our agenda. But as they said in ancient times, an easy accord is not to be trusted; the main thing is to reach an accord eventually. We are acting on the assumption that if we receive additional funding we will increase allocations on the priorities outlined in these programmes.

Twelve programmes have been approved following a detailed discussion at a Government meeting, and several other programmes are being improved. Back in May, we agreed that the implementation of at least five of these programmes would begin on 1 January, 2013. I now hope that there will be considerably more such programmes. It means that we are working quite well, on the whole. We must organise our work so as to ensure that all programmes that are approved by the Government are forwarded to me for signing by the end of the year, and hence approach implementation.

Speaking about our achievements and the challenges facing the country, I have mentioned demography. The statistics are quite good, yet the challenge still exists, and there are many unsolved problems in this sphere, despite the natural population growth. Out main task is to stabilise demographic trends, to strengthen them. I’d like to draw the attention of all Government members to this issue, because the Government has been working on it since 2006, and it would be completely unacceptable for us to squander our good achievements. We can stabilise the country’s population at some 142-143 million people by 2015 despite existing negative forecasts, and also increase life expectancy to 74 years by 2018. This is the goal of the programmes in that sphere.

We are providing systemic assistance to families with two or more children, and continue to pay maternity capital from the federal budget. I’d like to remind you that 71 regions also pay regional maternity capital from their budgets, and 80 regions stipulate the free provision of a land plot for building a home [to such families]. Incidentally, we need to analyse the situation in the other regions, which have their problems and their specifics. They should certainly be taken into account, yet the rules are the same for everyone. Low-income families with three or more children will receive monthly allowances starting in 2013. We will promote the payment of these allowances through co-financing mechanisms. We are working together with regional authorities to ensure that there are enough places for children at kindergartens. Just to remind you, we must ensure total accessibility to kindergartens by 2016.

I’d like to draw your attention to the fact that, although a programme is definitely an important document, it is only the beginning of a difficult job. We must ensure close monitoring and control over its implementation, including independent assessment of the results through an expanded statistical survey system. Of particular importance is the outline of this work, based on the polls of the business community and the general public, as well as on expert evaluations.

All information should be freely accessible for the parties concerned – anyone who takes an interest in how this country has been developing. The results should be available online for review.

Second. The Government has drawn up a federal budget for three years, which takes into account the state programmes. The State Duma passed the main financial document in the third reading, and it was approved by the Federation Council yesterday. I would like to thank the legislators and the Federation Council once again for their active joint work: thank you, it was really very important. And, of course, I would like to thank all members of the Government and experts who took part in the drafting of this document. It is a realistic and balanced document.

I said a while ago that a budget generally has very few admirers; it is not a document that typically evokes positive emotions. But it is of much greater importance for us that it should be implementable, realistic and capable of promoting this country’s development. It is not a restrictive budget, of course; it has investment potential and it retains opportunities for economic growth. But we will also watch what is going on in the world markets, and accordingly will decide on how to adjust it next year. Hopefully, these will be the right kinds of adjustments.

We proceed from the need to preserve macroeconomic stability, reducing this country’s dependence on oil and gas revenues, and distributing the allocations effectively on the basis of the new budget rule. We had difficulty arriving at this decision, there were many disputes. But everyone, even the Government’s active critics, recognises its potential effect as being generally correct. Its logic consists of the fact that social spending and the financing of long-term investment programmes should not be pegged to current oil prices, and that our reserves should be sufficient for meeting all our commitments, even if the world prices of raw materials go down.

Meeting our social commitments is the top priority, as I said. The budget provides for an increase in social spending and replenishment of the pension, social and medical insurance funds. Social payments and pensions will be adjusted for inflation.

The third item – I mentioned this six months ago – is to ensure consistent pay increases in the social sphere. On 1 October 2012, 14 million employees of federal government-funded and autonomous agencies had their salaries adjusted for inflation by 6%. The aim is to bring the salaries of doctors, paramedics, teachers, scientists, and social and cultural workers to the average level for a region’s economy (and in certain professions, to twice the average salary). Let me remind you that this involves almost six million people. Certain steps have already been taken. As of September of this year – let me stress this fact – the average salary for teachers is 93% of the average pay in a region’s economy (it should reach 100% later this year), while the salary of university teachers amounts to 102% of the average pay for a region’s economy.

Among other things, money for larger salaries for teachers and medical workers will derive from federal-funded regional education and healthcare modernisation programmes. Generally, pay growth will be consistent with the recently approved Government programme for a step-by-step improvement of the remuneration system at state and municipal agencies for the period from 2012 to 2018 on the basis of the so-called industry-specific roadmaps.

Special attention should be paid to work quality, skill upgrades in conformity with new standards, and incentives for better performance. Higher pay and quality of work are two interconnected things. The Finance Ministry never tires of reminding us of this, and they are absolutely right.

After all these decisions have been put into practice, doctors, teachers, university instructors, scientists, and cultural workers should feel they are fully-fledged members of the middle class which, as is common knowledge, is the source of social stability in any society.

Fourth, the investment climate. Our goals are well known in this regard. Regrettably, we haven’t achieved any significant success in this area. We should reduce administrative barriers, increase efficiency of government agencies, and instil more trust in the decisions accepted by both the executive authorities and the courts. There are many problems, and we are aware of them.

Of course, there are certain results and you are aware of them, too: for the first time in eight years, Russia has gone up in the World Bank’s rankings. Eight years. The situation looks relatively good in some areas, such as tax administration where we climbed to the 41st position. This is the most significant advancement among all the countries participating in this rating. That’s no reason to be complacent, but still it's really a good number. Nevertheless, we need to join efforts with the business community and address the most sensitive issues affecting entrepreneurs and put together road maps with an eye toward simplifying existing procedures. This work should be performed as part of the National Business Initiative.

Four roadmaps, namely, on customs, support for exports, affordable energy infrastructure and improvements in the business environment in the construction industry are already in place. The work on six more road maps is nearing completion, if I understand it correctly. However, it’s clear that we should actually implement these roadmaps, so that our plans become reality. We need to coordinate our work with businesses and our colleagues.

Another priority for the next six months that I have mentioned earlier includes the privatisation of shares of state-run companies. I have already said that this is not only a way to privatise state property and add revenue to the budget, but also a way to promote our economic policies. Clearly, private entrepreneurs and owners in general are more interested in growing their businesses. We have a fairly good track record of working in this direction and rather successfully, I believe. This year, we will send about 300 billion roubles from the privatisation of federal property to the budget.

Privatisation auctions are quite appropriately being organised by investment banks selected on a competitive basis. This is an effective approach, and the final prices for several facilities have been very nice. We must continue down this course and shed excess property. The privatisation plan for 2013 amounts to 380 billion roubles. I’ve mentioned it before and I’ll say it again: we should always base our decisions on the real situation in the financial markets, the availability of quality investors and the readiness of privatised enterprises to work under new conditions. In no event can privatisation be replaced by the sale of shares to other state-owned companies. A decision to this effect has been taken, and I have signed a corresponding resolution.

The privatisation of unitary enterprises is proceeding slowly. This is due to poor preparation of federal property and, unfortunately, the lack of property titles. This is a very common problem in Russia: there’s no paperwork for buildings and land under unitary enterprises. Paperwork was maintained poorly to begin with, and then it was lost altogether. Please focus on putting together documents, replace them as needed, or just find ways to do without them whenever possible. Of course, this information should be open to public.

Now, let’s talk about the quality of public administration and improving the efficiency of public service. We should focus on introducing transparency standards for government agencies to include public participation in drafting government documents, openness and availability of information for discussion, the ability of citizens to share their suggestions and actually take part in government decision-making. In late October, the State Duma passed in the first reading a draft law prepared by the Government which provides for the participation of representatives of public councils at ministries and departments in the work of contest and evaluation committees. Thus, civil society will get additional leverage on government human resources. We assume that this document will be adopted and come into force as early as next year. A performance assessment system for regional leaders has been introduced recently, which takes into account demographic, economic and social factors and the friendliness of the business environment. I have recently approved two lists of specific performance indicators. Importantly, the final assessment should reflect public opinion as well. The most successful regions will receive grants from the federal budget.

Finally, the seventh point that I’ll make today is about the Open Government. An ongoing dialogue with civil society is, perhaps, one of the most important innovations in our work. I would like to specifically emphasise the term “dialogue,” not monologues by heads of ministries and departments. It should be a two-way street based on feedback and dialogue supported by subsequent actions of the authorities.

In early August, I approved the first half of the members of the Government Expert Council: 200 representatives of different social groups. I hope that decision on the other half will be made soon.

Dozens of bills and public programmes have been discussed and many revisions have been made, with some documents sent back for revision. It was comforting for me to know (I think you also noticed it) that public and business organisations have expressed their satisfaction with the way the system works, saying that some of the issues that have remained on the back burner for years were quickly resolved by the Open Government, such as industrial safety regulations.

At least 20 bills will be reviewed by the Open Government. Of course, I will take active part in this work. I believe all Government members should be involved. Some of them, as a public initiative, can be put to a public vote by 100,000 citizens who are entitled to make such decisions. Let's see how this tool works. Anyway, it’s interesting to launch such a project. Let me remind you, federal departments have been charged with the task of implementing the Open Government principles. I hope you’ll do your best to make this happen.

Next, there’s an Open Region project which is now being implemented in 18 regions and 4 municipalities. The main goal, of course, is to bring government and people closer together and maintain an active dialogue. The Open Government is not something that we came up with sitting in comfortable armchairs.

The Open Government and the Open Government Partnership is an international phenomenon. I hope that we will join this partnership in March.

Colleagues, our goal over the past six months was to create something to work with in the future, show progress across these seven priority issues that I mentioned through a project-based approach and hard work. I believe that we were up to the task, but we must keep up the good work. I would also like to say that the Government has become a team of like-minded people and a well-oiled machine as result of communication, negotiations, meetings and discussions.  That doesn’t mean that we will not have any disagreements in the future: there will be plenty, but that's okay, that's what this work is all about.

Today's meeting is part of our work. We have two draft government programmes –  Social Support and Culture of Russia – to consider today.


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