7 may 2013

Meeting on implementation of presidential executive orders of May 7, 2012


Vladimir Putin: Good afternoon, colleagues,

One year ago today we presented a transformation strategy to society, outlined the targets to be achieved by 2018 and planned the specific steps to be taken to reach those targets, thus improving the quality of life and making the economy more efficient.

I stress that the overall objective of this work is to create new and higher standard of living for the citizens of the Russian Federation, primarily by substantially improving the efficiency of public administration and the state’s performance.

I want to emphasise this especially, colleagues. The means by which we will achieve these goals are a question of principle. First of all, I repeat, by more efficient public administration and improved performance of the state, as well as the growth of investment in the economy.

Particular attention was paid to the development of education and healthcare, and the housing and utilities issues, which are the sectors that cause the greatest concern for our citizens.

The public supported our action plan, which will ensure stable national development. All of the programme’s provisions were stated in the presidential executive orders that were signed exactly one year ago, on May 7, 2012. That is why we have met here today. I propose to discuss in detail the results we have achieved, the problems and why they have not been resolved so far, and the areas in which we are lagging behind.

I also believe it crucial to identify the main challenges for the coming year in all key areas of our development. I stress that we have set very ambitious objectives, and we will be working to reach them in very difficult conditions. The situation in the global economy is highly complicated, and this affects the economic growth rate in our country.

Nevertheless, I am confident that the objectives we have set are absolutely realistic despite all the current problems and challenges. We must not use the complex, objective circumstances as an excuse. We must carry out all the measures we have planned. Expectations in society are very high, as the recent Direct Line session clearly demonstrated.

Naturally, we needed the time to form the Government and to set this very complex mechanism in motion. But in order for the goals we have set ourselves to be achieved, we must work conscientiously already now.

I want to say straight away that we have achieved some results. Over the past year we managed to break the deadlock on many chronic problems. The demographic indicators remain good. We are increasing support to large families. Thus, this year we launched a completely new, complicated and financially demanding programme of assistance to large families in more than 60 regions of the Russian Federation. We have started to pay benefits to families after the birth of the third child. I want to emphasise that this is a new programme. In 50 regions with a difficult demographic situation benefits are subsidised by the federal budget, while 14 regions use their own funds to pay benefits for the third child.

Next. We have increased support for university students, the first- and second-year students in need who achieve top marks. They are already receiving an increased stipend in the amount of a subsistence minimum. Let me remind you, this measure was also initiated a year ago in the course of direct discussions with the public.

Real incomes are not growing as fast as we would like, but there is still growth, including among university faculty members and public sector employees. There are still many problems, but the fact remains that the average salary for university staff in March 2013 exceeded the average regional wage in 65 Russian regions. In 34 regions, university salaries exceed the average wage in the region’s economy by 125%.

Last year, we were able to bring teachers' salaries up to the regional average in a number of regions. It is important that the teaching profession is again becoming prestigious and highly respected in our society. As a result, professional standards are also growing. In many cities competition for jobs at schools is very tough and there are many applicants for each vacancy. This is definitely a good indicator.

It is clear that not everything is going smoothly; in some areas there is inertia, lack of commitment and sometimes inability to work as hard and make the right decisions. Often the salary increases are not accompanied by increased quality of service, and structural changes within sectors are slow. Public sector institutions often continue to pay salaries simply for the fact of being present in the workplace.

We must bear in mind that the key is not the amount of resources we allocate (although this is very important as well since not a single issue can be resolved without funding and it is vital to spend each ruble frugally); what is even more important is the effectiveness of the measures taken and their focus on concrete results. Otherwise the funding we set aside for the reforms will disappear into the black hole, as they say, and there will no clear benefit for the people.

Let me give you a few examples. Over the past eight years funding for healthcare, for example, has increased almost four times over. However, the most important steps (the newest most important steps) that we have talked about many times, namely introducing standards and procedures governing the provision of medical assistance, were not completed within the allotted timeframe, or at least not in full. And this directly affected the quality of work done at healthcare facilities, increased confusion as to what is absolutely free of charge, and what may fall into a different category. Naturally, it also affected the salaries of healthcare workers. Even though salaries in the industry are generally higher than, say, those in secondary education, many, many problems remain. I will talk more about this later.

I would draw your attention to the fact that we can no longer postpone structural reforms; we risk missing a window of opportunity. Therefore I believe that this year’s most important priority should be the practical introduction of new working principles into public institutions.

At the same time I want to warn you once again about mechanical, hastily-made decisions. This first and foremost applies to the fate of ungraded rural schools, rural medical assistance centres, birthing centres and hospitals. We must be more careful when approaching the reorganisation of educational institutions, including those of higher education.

In general, the public sector needs to cooperate closely with the professional community and Russian citizens. Of course, at first glance what I just said might seem to be opposing and irreconcilable tasks, but this is not the case. It is not the case!

When we talk about network restructuring, for example, it is more difficult to create interdistrict, interregional hospitals, than it is to shut down a rural medical assistance centre, where the nearest medical facility is 200-250 kilometres away, off roads. People keep quiet there; they will not say anything. However, the regional authorities and relevant federal bodies must know about this.

We must look for additional savings by increasing labour productivity as well as reducing costs and inefficient, often frankly frivolous spending.

In this connection I would like to point out the following. For a long time remuneration for a manager’s work did not depend on the quality of work done at a public institution he or she headed. Along with this it often exceeded employee salaries many times over, and without any foundation whatsoever.

To a certain extent this was our mistake too: we relied on the belief that everything would right itself within the groups themselves. Nothing has righted itself on its own. Now we must make other decisions and directors’ salaries are directly linked to the average salary paid out in their institution. This is the first point.

The second: as of this year, the heads of public institutions must report their income and those of their families. Let me warn you that these reports must not become their own kind of sham.

And there’s more: we have already held meetings about regional budgets, but regions are still complaining about how difficult it is to meet objectives. Unfortunately, timely, coordinated actions and necessary methodological support from federal departments and agencies is often simply absent.

For example, what happened to additional payments for primary healthcare professionals and those providing emergency services? Those famous 5,000, 10,000, 3,000 and 6,000 rubles [from $97 to $321]. These obligations were transferred to the regional level. At one point we introduced this from the federal level; I introduced it, I remember it well. It was a very correct and timely measure.

Now we agreed that we will transfer responsibility for these payments to the regional level. Did we allocate the funds? Yes, we did. Did we keep our promise to allocate them? Yes, we did. Did these funds reach the regions through the compulsory health insurance system? Yes, they did. And yet they did not reach healthcare workers themselves. Simply because the relevant mechanism did not operate in a correct and timely fashion.

I remember very well our conversations at the meetings on this subject, when colleagues urged that we transfer the money to them, that this should and must be a regional commitment, and one that they would fulfil, because after all we were sending the money. I would ask you to remember what I said then. I told them that: “They will not pay, there will be failures.” And they said: “No, we will pay. We will “colour” the money.” Did they colour it? Who needs that ‘colour’? Where is the money?

You know, you can argue and swear as much as you like about the so-called “manual steering method”. Fine, let’s not do things manually. Let’s do them systematically, but then we have to introduce a system that works effectively.

Another issue: it is not entirely clear whether the financial contributions to the regional budgets are sufficient. How can the regions be expected to tackle the tasks they have been given? At the same time, the cash flow is clearly not what it should be: out of the 192 billion rubles of additional budget allocations for specific activities directly arising from the executive orders, only 17 billion have been paid out in the 1st quarter. That is less than 10%. I propose that we talk about this, too. What is going on here? Are we going to put everything off until the end of the year again? Well, I can guess what the result will be, and you know it, too.

Colleagues, I will repeat: today the quality and effectiveness of our actions come to the fore, so we cannot afford to re-examine the decisions and documents that have already been adopted, to approach our tasks formally, just to have something to report on the execution of orders or to submit another piece of paper. The reports are not the point here, and I’ll come back to this later.

Let me give you a specific example. One of the strategic challenges arising from the executive orders is the socioeconomic development of the Far East and the Trans-Baikal Territory. The relevant state programme has been approved and adopted, but the funding for the programme has not been provided.

This programme requires 3.8 trillion rubles of federal funds – a huge amount – by 2025, of which the Finance Ministry has confirmed only 296 billion for the period to 2020. The question is, why did we adopt this document if it is not clear how we are going to finance its implementation? Just for the sake of appearances?

I understand that we can talk about some additional revenues that will come in the future. Why are we kidding ourselves? What revenues? How much will there be? And to say that this is a rough programme means that it is not a programme but a declaration of intent. We are talking about hundreds of billions of rubles from the budget.

Recently we analysed the results of another such kitchen-table effort, the programme for relocating citizens from unfit housing. Everyone could see from the word go that it clearly missed the mark with regard to the fairness principle. Nevertheless, we adopted the programme, forced it on the regions and a month later came to the conclusion that it was impossible to implement. Why adopt such documents? We are deceiving ourselves: there are no results and we discredit our own efforts.

The same superficial approach was adopted on the issue of allocating land plots to large families. According to the regions’ reports, over 54,000 large families received land plots last year. This is a very important initiative but what do we have in practice?

Families are given land plots in inconvenient locations, the property registration procedure, and issuance of building permits is clearly overly bureaucratic. As a result, families get the full measure of someone's incompetence and irresponsibility.

I have already issued instructions to come up with another option for helping large families improve their housing conditions. We need effective and practical solutions, rather than pieces of paper and reports, as I said.

What else do I consider crucially important? This year the focus of these executive orders’ implementation is largely shifting to the regions. It is there, on the ground, as they say, that we must achieve visible, socially-significant results. We are in the process of approving regional “roadmaps” of reforms in key areas. Unfortunately, I must once again point out that much is being done in a ham-fisted way. I can relate a specific example of the careless attitude towards developing these roadmaps.  

I recently looked at a document on the development of social services in one Russian region. The main text states that 25 percent of all residents who need a place in permanent regional social service institutions cannot get one. And this refers primarily to which categories of citizens? We know that these are disabled, solitary or elderly people. But the tables with various indicators show that this year the percentage of the region’s population receiving social services amounted to 97.9 percent.

So the problem exists, but regional documents act as if it does not. Who needs such “roadmap”? What is its point? And why did the Ministry of Labour and Social Protection agree to it? In general, in their roadmaps the vast majority of regions promised to reach almost 100 percent of all target indicators already in 2013 to 2015. And they promised to achieve them evenly, from year to year. Along with this, some of them were not able to cope with the tasks at hand already in 2012.

By the way, I also believe that we must act year by year. We recently met and everyone, or in any case the bulk of the participants, agreed with this point. We need to move forward evenly, and not drive something into a dead end, otherwise we will not be able to cope with all the problems at the end of the road.  

Thus, aware of our meeting today, at the end of last year and in the first quarter of this year, various regions began to throw money at problems, including in order to be able to report on salary increases in the education sector.

It is clear that such actions do not resolve the problems that concern our citizens. On the contrary, these approaches can also trigger negative reactions. This has already happened, and I know and remember it well: by taking some action people fix the figures, raise salaries, and then slash them at the end of the year. And I know such practices. But in the end they will discredit all the work we have undertaken together.  

We must admit that federal ministries and departments often do actually force regions to resort to various manipulations with current and test benchmarks. I have already talked about this in relation to the programme for relocating people from unfit housing. Because one federal agency needs a nice report, while another receives subsidies and more from the federal budget. And they simply say to the regions: if you don’t sign here there will be no subsidies! Well, do we not know this? We do! I want to stress once again that we will judge the implementation of the executive orders not on paper, but according to whether or not they have improved the quality of people’s lives.  

Next, I have already said today that we have had to implement the executive orders in difficult macroeconomic conditions. For that reason the significance of each measure increases based on its potential to promote economic growth (this is a fundamental issue), to enhance country’s productive capacity, to improve the investment climate, and to create jobs. And in this respect nothing is too small! Together we have come back to these issues many, many times, and everyone agrees that this is a crucial point.

What happens? For example, the mechanism of state guarantees for loans to medium-sized manufacturing businesses – an extremely important measure – does not work. Incidentally, the funds allocated for this purpose, 20 billion rubles [$650 million], are not huge. But nevertheless budgetary funds have been allocated and they remain unused. And to receive these guarantees – I looked at the relevant rules yesterday, while preparing for our meeting today – to get these guarantees is almost impossible, just try and do it yourself. It is impossible. So the money is just collecting dust.

This is true even though the mechanism for providing state guarantees should have been approved by the Government before November 1, 2012. What is happening? Against the backdrop of a difficult global economic situation, we are looking together for new incentives to support growth. By the way, we do find them. However, earlier decisions taken and money allocated (and we did find some money – it was difficult, but the Government did so nevertheless) with the goal of supporting development are either functioning at limited capacity or not at all.

Another example. To stimulate the growth of housing construction, to reduce the developers’ costs, and, therefore, property prices, the Government was instructed to establish an exhaustive list of administrative procedures in the field of construction by December 2012. An exhaustive list of procedures.

The Government has drafted such a list, which is certainly good. By the way, it was not an easy job. However, in October, they suddenly remembered that it was necessary to introduce amendments to the relevant law granting the Government the right to adopt such a list. Everything is clear here: we must act and move forward.

Colleagues, since last October you have been unable to introduce the corresponding amendments to the State Duma. As a result, your exhaustive list of administrative procedures in construction has remained just a project. You did a huge job, you made a very necessary and positive step, but now you must bring it to conclusion and launch this mechanism, because otherwise it will remain on paper, a pointless effort.

A few words about the work on the implementation of the roadmaps to improve the business climate. What is striking here? After all, we all agree that this is also an extremely important job. We all agree, without exception: the expert community, the Government and the Executive Office – everyone is talking about it.

What do I want to highlight here? We have made some good progress in a number of areas. That is a fact. However, far from all of the measures stipulated by the roadmaps are being implemented in a timely manner. Let me stress that we adopted the roadmaps, including the one on the promotion of competition, in order to execute them and not just to report that they had been adopted. What is the use of adopting them if they are not being implemented?

Furthermore, the Government is not in a hurry to approve the new roadmaps on such issues as the quality of state regulation and the access of small and medium-sized businesses to state procurement orders. We have been talking about it for a long time and everybody, I’ll repeat this for the third time, is thrilled about this crucial area of our work.

The roadmaps on enhancing the quality of state regulation and on improving the access of small and medium-sized businesses to the procurement orders of infrastructure monopolies and state-owned companies, which were approved by the Supervisory Board of the Agency for Strategic Initiatives on November 21, 2012, have still not been adopted by the Government. All of these roadmaps were not plucked out of the air. Anyway, the point is not that the Agency for Strategic Initiatives, which, by the way, has been very efficient, has approved it. That is not what I am talking about.

I am talking about the business community and our joint efforts to tackle these challenges. We all recognise that this is a crucial area of our work together. And these roadmaps were not plucked out of the air. They are, in fact, the product of your own efforts because it was all done with the participation of the business community, experts and the Government, the respective deputy prime ministers and ministers.

There were no objections. That is, there were objections during the discussion, but we all agreed in the end. Yet no progress has been made because the roadmaps have not been adopted since last autumn. Why not? We argued until we were hoarse, we came to agreement and signed the documents – and then proceeded to shelve them.

I want us all to understand clearly that we need high growth and entrepreneurial activity. Therefore, under no circumstances must we limit our efforts to cosmetic measures. Incidentally, the international expert community and our experts have pointed out that we are moving forward but very timidly, to say the least.

I believe that the stated goal of creating a competitive, comfortable business environment can be achieved more quickly, and it is our duty to achieve it faster in the interests of national development. I ask the Government to seriously speed up the implementation of these roadmaps.

Colleagues, the most important condition for the success of our work is engaging our society and citizens in the reform process. We must be sure to interact with people, explain the logic behind and meaning of our actions, and listen to the opinions of civil society.

In this connection, I will talk about the strategy for developing our pension system. Yesterday evening we talked about this with Mr Medvedev in some detail, discussed this sensitive issue that concerns everyone without exception. Over several successive months we’ve had a difficult, very sharp and hard discussion. Along with this the Government has not yet come up with a pension formula that is clearly understood by our people. Either this formula is ready or it is not. Colleagues say that it is, but if so then let’s have the Government pass it, submit it to the Duma, and discuss it with people. This can’t be done behind closed doors, and shouldn’t be either. Why? It is necessary that people understand what is happening, what is on offer.

Take a look at what’s going on in Europe. In Portugal they are raising the retirement age again, this time to 66. And in most European countries there is no gender difference for the retirement age. We have repeatedly stated that we consider it inappropriate to raise the retirement age in Russia, and we will not do so. Because our life expectancy is less than Europe’s, to put it mildly.

But we still have to offer clear and understandable solutions to problems, and problems do exist. We know what our colleagues from the so-called liberal expert community suggest. They say you can’t do it without raising the retirement age, and the sooner you do that, the better. But this is a very acute social and economic problem. We say no, we will not, we believe we can do things differently. How? What is the solution then?

Once again I want to say that as a result citizens still do not understand how their future pension will be calculated, on what it will depend. I would ask again that you conduct a broad public discussion on this issue before autumn.

Another important point is that we have given people the right to choose whether to direct four percent of their insurance premiums to their insurance, or to the funded part of their pension. They must make this decision by the end of December this year. We are in May, and we have yet to see active educational outreach to Russian society, although the relevant instructions have been given.

We promised citizens that they will have time to make an informed choice between funded and insured pension schemes. They should have a clear understanding of exactly how pensions are calculated in each of these schemes. I would ask you to speed up your work.

I would draw your attention to the fact that we still have a great deal of work to do to increase the transparency of government, and to expand the range of ways that citizens can influence authorities’ work. We are definitely going to move and we must move in this direction (we chose it ourselves). Of course the efforts the Government has made with regards to increasing the transparency of its work must and shall be supported.

The system for disclosing information about draft laws must be fully functional, as well as the Russian Public Initiative web portal. The relevant legal framework has been adopted. The site has been online since April 2, and citizens have begun making suggestions very actively. At present, more than 900 such initiatives have been made.

However (once again I have to begin a sentence with  “however”), the Government has not yet formed an expert group to consider these proposals. I draw your attention to the fact that the public’s assessment of our actions is essential. Let’s start our discussion. I’ll give the floor to Vladislav Surkov, co-chair of the commission on implementing executive orders. Mr Surkov, please go ahead.

Vladislav Surkov: Mr Putin, Mr Medvedev, ladies and gentlemen. To be honest, after your words my review on the implementation of presidential instructions and executive orders has become pointless, because you have already given your detailed and absolutely correct assessments. But I will still say a few words on this score, and address some technical matters.

The Government sees your executive orders of May 7 as a strategic instruction and the agenda for all federal and regional executive bodies for several years to come. Naturally, we understand that this package is aimed at improving living standards in Russia and implementing the President’s election programme. We appreciate the political and social importance of these tasks.

Indeed, in cooperation with the Presidential Executive Office through the commission on monitoring the implementation of social and economic tasks we are coordinating work to fulfil your executive orders. While realising that a paper is just a paper, I must still say that the Government promptly delivers its reports. As for the content of these reports… You have made your assessment of the reports and I was going to do the same but it would be stupid to repeat this. So, I can only agree with you on this.

Out of the more than 200 instructions based on the executive orders, 151 must be fulfilled in 2012-2013. We have fulfilled 111 instructions, and this is fairly good. Out of these you no longer monitor implementation of 88 instructions, and some instructions are being implemented right now. Regrettably, there are about 50 instructions that have not been carried out properly. We have already mentioned the areas concerned, and now we are paying special attention to their implementation in cooperation with the Presidential Executive Office. In part, we’ll use administrative efforts to this end.

I’d like to point out that this year we have been working on a legal framework. In the period under review, the Government adopted 40 state programmes, including 14 priority ones that were mentioned in your executive orders. In order to fulfil your executive orders and instructions, we submitted to the State Duma more than 30 draft federal laws that were adopted and another 25 are still under review. So, all in all we have submitted more than 50 bills to the State Duma. The main regulatory documents, such as the Policy Priorities of the Government to 2018 and the Long-Term Socioeconomic Development Forecast to 2030 have been adopted.

I’d like to point out that we have given priority to raising salaries of some categories of citizens. These figures have been mentioned more than once – during the past year the salaries of teachers and medical workers were raised by 18% and 20%, respectively. The necessary allocations have been made for the forthcoming budget period as well.

The Strategy for Pharmaceutical Support of Russia’s Population to 2025 has been adopted. The goal of this important programme is to bring the share of domestically produced vital medicines to 90%.

I’d also like to point out some of Russia’s rankings achievements, including those on improving the investment climate. During the recent period we made a small albeit noticeable step forward and moved from the 120th to the 112th place in the World Bank rating. This represents some progress and in certain indicators of this comprehensive ranking system we have substantially improved our positions. Thus, in tax administration we have moved to the 41st place, which is a good sign.

Vladimir Putin: We’ve even left behind some leading market economies.

Vladislav Surkov: Exactly. I’d also like to add that the Bloomberg international news agency has listed Russia among the world’s top 20 innovative countries. We are ahead of Britain in this respect and are the leaders among BRICS countries. I think this is the appreciation of Russia’s long-term efforts to create the elements of an innovative economy.

I’d also like to mention the work on easing public access to government services. In line with your instructions, we must provide easy access to government services on a one-stop basis for 90% of the population by the end of 2015. This is a large and comprehensive task and all regions are involved in its implementation. This is very important for people because our goal is to reduce red tape and make their lives easier. We have developed methods and created institutional requirements to this end. We have even allocated some funds for targeted support of the regions that will need them to build the necessary infrastructure.

Mr Putin, to be honest, I’d like to conclude my report on that note, if you don’t mind. Otherwise I will just repeat what you have already said. I’d just like to say on behalf of the Government Executive Office and the entire Government that we will do everything in cooperation with the Presidential Executive Office to address existing shortcomings and to handle the tasks you’ve assigned. Thank you.

Vladimir Putin: Thank you. Let’s hear from our colleagues, the ministers, and then have a free exchange of ideas. If there are any ideas or proposals, we’ll formulate and generalise them.

Ms Skvortsova, Minister of Healthcare, go ahead, please. 

Veronika Skvortsova: Thank you. Mr Putin, colleagues, instructions to the Ministry of Healthcare are contained in six presidential executive orders. The instructions regarding the development of concepts, strategies and other policy documents have been carried out on schedule. In accordance with Presidential Executive Order No. 596, we have developed and approved the Development of Healthcare state programme, which outlines the main objectives, goals, and focuses of healthcare development, as well as the targets that are fully compliant with the benchmarks outlined in the presidential order. All benchmarks are tailored to each Russian region and are based on the state programme; 83 regional healthcare programmes and roadmaps have been developed.

In accordance with the executive orders, we have also developed six other strategic and conceptual documents, of which I would like to mention the Strategy for Promoting Medical Supplies, the Strategy for Promoting Medical Science, a set of measures to improve healthcare both system-wide and for each region, and a set of measures to improve personnel policy. We have developed and adopted important federal laws, such as the law on tobacco control, which becomes effective on June 1, as well as an action plan to promote healthy eating to 2020.

The Ministry of Healthcare has developed and is actively implementing a set of systemic measures to improve the healthcare model and implement all conceptual documents.

For the first time, in 2012, a programme of state guarantees for free medical care was drafted for a three year period and a requisite planning period was thus established. For the first time, this programme includes funding standards for prevention and medical examinations, and emergency and palliative care, which allows us to focus on addressing these important priorities.

From July to December 2012, the Ministry developed, approved and posted on its official website 60 procedures for providing medical care across all major medical fields and 797 standards of care. Registration for all these (over 850) documents with the Ministry of Justice was completed in April 2013. The standards cover all classes of diseases affecting more than 80% of our population and an additional 482 more rare diseases, and 22 orphan diseases. These standards apply to all types of medical care. As standardised documents for calculating the cost of medical care guaranteed by the state, the standards are needed for transitioning to a more efficient method of payment and pricing that is currently used worldwide based on clinical and statistical groups. This payment method makes it possible to send financial resources precisely to each medical facility depending on its specialty and type of care and to form cost-control mechanisms. It is based entirely on the end product, thus making it possible to implement effective contracts.

Russian clinical and statistical groups were developed for the first time in November 2012 with the participation of World Bank experts. According to international experts, the number of standards of care developed in Russia is sufficient for the effective operation of the clinical and statistical groups and the entire financial system of the healthcare sector, since these standards cover more than 70% of the diseases included in each clinical and statistical group.

The Government resolution of October 2012 established alternative payment methods for health services for 2013-2015 based either on a standard, a closed case, or clinical and statistical groups. For the first time, they have completely excluded old forms of payment based on gross numbers, such as bed-days and visits, which lead to extensive, inefficient costs in the healthcare system.

According to international experience shows us, it will take us no less than 4-6 years before we can switch completely to financial planning and paying for healthcare services on the basis of a unified system of clinical and statistical groups and thus do away with the old healthcare system. We will first need to introduce appropriate changes to the legislation of the Russian Federation.

As you have noted, Mr Putin, the total amount of spending on medical care increased by 26% in the first quarter of 2013, including incentive payments in the amount of 114.9 billion roubles. New payment methods as well as methods for making funds available to each medical facility have been developed. The regions that have fully used the recommended modern ways of making funds available to institutions and paying for healthcare services have increased salaries for the first quarter of 2013 by 120% for doctors and nurses. No violations in salary payment or lowering the amount of salaries have been identified.

Salaries for doctors will increase by 129.7% in 2013 relative to the average salary in the regions, while nurses’ and medical attendants’ salaries will increase by 75% and 50%, respectively. Average doctor salaries increased by 116% in the first quarter of 2013 and up to 115% of the average for the region for nurses. Salaries in 49 regions are above the established benchmarks for 2013. However, salaries dropped in several Russian regions and individual medical institutions. The analysis conducted in each of the 83 Russian regions has shown they dropped due to late adoption of the regulations for paying bonuses to primary care and ambulance personnel and poorly designed solutions for tariff commissions in Russian regions. Thirty-four regions failed to achieve the targets for doctor salaries, 28 regions for nurses, and 52 for medical assistants. Nine regions lag far behind the 2013 targets outlined in the roadmaps approved by the Ministry of Healthcare.

Due to delayed adoption of laws and regulations governing terms and conditions of bonus payments, seven regions delayed payments and reduced salaries. I will not list these regions, since decisions to restore previous amounts of salaries have been adopted ​​by all regions. I would like to note that in addition to the quarterly monitoring of salaries conducted by Rosstat, the Ministry of Healthcare has introduced, beginning March, monthly monitoring of salaries not only in the regions, but in each medical organisation. We received the first such report on April 15. According to our preliminary data, the situation is improving in the regions that made mistakes, and we will make our best to ensure that all salary targets are met by late 2013. Thank you.

Vladimir Putin: Have you checked all the regions?

Veronika Skvortsova: Absolutely. We checked all the regions and held eight on-site medical meetings in each federal district in the presence of the plenipotentiary presidential envoys.

Vladimir Putin: All right, we will get back to these issues. Mr Livanov, please go ahead.

Dmitry Livanov (Minister of Education and Science): Mr Putin, Mr Medvedev, colleagues. First, I would like to say a few words about wage-increase trends in the education system.

Since the start of the academic year in September and until March, the nationwide wages of pre-school educators and secondary-education teachers increased by 36% and 14%, respectively. The wages of teachers providing additional education for children and the wages of instructors in the primary and secondary vocational-education system increased by over 21%, 23% and 15%, respectively. In the first quarter of 2013, the average wages of teachers increased by 23% on the first quarter of 2012 and topped 26,000 roubles.

The wages of school teachers exceed the average wages in the economic sectors of the Tyumen, Tver and Samara regions, in Moscow and in the Perm Territory by over 15%. Naturally, there are some regions where the situation is rather complicated, primarily in the North Caucasus republics, in the Trans-Baikal Territory and in Yakutia. Here, the average wages of school teachers are less than 90% of the average regional wages. The Tver, Tyumen, Nizhny Novgorod and Belgorod regions and the Krasnoyarsk Territory now lead the way in terms of pre-school educators’ wages. At the same time, the wages of pre-school educators in Karachayevo-Circassia, the Republic of Tyva and in the Trans-Baikal Territory are less than 75% of the average secondary-education system wages.

It is particularly difficult to reach the wage increase targets for pre-school educators because their wages were extremely low. Furthermore, their wages should be comparable with those of the secondary-education system, which are being raised all the time. Nevertheless, positive trends are being posted in this area. In the fourth quarter of 2012, only 23 regions attained the preset targets. And in the first quarter of 2013, 45 regions have already attained these targets. We have no doubts that the wages of pre-school educators will be raised to adopted targets before the year is out because regional budgets stipulate the relevant funding.

The situation with higher educational institutions is as follows. Last year, 75 Russian regions raised the average wages of higher educational institutions’ instructors to 100% of average regional wages. Against the backdrop of standard nationwide higher-education financing levels, it was particularly difficult to accomplish this objective in high-revenue and net-contributor regions, including Moscow, St Petersburg, autonomous areas and the Tyumen Region. Nevertheless, this was done.

This year and in 2014-2015, 24, 38 and 62 billion roubles’ worth of additional funding are stipulated for raising the wages of university instructors. It is possible to ensure the cost-effective use of these assets only in the event that higher professional standards for instructors are introduced, and if structural reforms are implemented. Currently, the actual number of university instructors exceeds their staff number by 30%. In some higher educational institutions, this surplus may reach 40% or even 50%. Obviously, by raising the wages of all employees in this situation we would end up increasing personnel. Consequently, we must seriously reorganise the human-resources system of higher educational institutions over the next few months prior to the start of the next academic year. We will do this, and, starting September 1, 2013, all state higher educational institutions in this country will convert to a new system of salaries, which will be raised considerably. We advise the management of higher educational institutions to make sure that the salaries of assistant professors should account for at least 75-80% of average regional wages. I am talking about their permanent salaries, which do not depend on any factors. If we accomplish this, we would completely raise the average wages of university lecturers to 110% this year. And we will consistently raise their wages over the next few years, so that they would reach 200% of the regional average. We have the required allocations for doing this, but, as I have already said, substantial changes are essential.

At the same time, I would like to draw attention to the fact that regions with the greatest number of college and university subsidiaries face the greatest wage-related problems. Some regions have one, two or more higher educational institutions with numerous subsidiaries. Understandably, they are having more problems raising the wages of instructors because subsidiaries usually pay lower wages to instructors than parent higher educational institutions. The quality of education is also lower at subsidiaries.

Certainly, it is our opinion that efforts to improve the efficiency and quality of the system’s work go hand in hand with raising the wages of university lecturers.

The shortage of accommodation at kindergartens and pre-school educational institutions is another major problem plaguing our sector. Current monitoring surveys show that up to 33% of Russian citizens face this problem. Currently, 78% of children 3-7 years of age are involved in pre-school education. At the same time, there are no places in kindergartens for 366,000 children. Considering current demographic trends, we will have to create an additional 1.2 million vacancies at kindergarten and pre-school educational institutions by January 1, 2016.

We have already compiled action plans making it possible to cope with shortages of accommodation at pre-school educational institutions in every region. Under these plans, an additional 755,000 vacancies for children 3-7 years of age will be provided, including 398,000 vacancies through construction of new and reconstruction of existing kindergartens. And the rest will be provided by using various forms of pre-school education. Nevertheless, there is still no accommodation for about 400,000 children. The Government has decided to allocate federal-budget funding to regional budgets, so that it would become possible to create additional vacancies at pre-school educational institutions. It has already been decided to allocate the first, 50 billion rouble tranche, which will be spent this year. This subsidy will be calculated with due account for regional demand for additional vacancies. And this subsidy will be provided in exchange for regional pledges to ensure 100% affordability of pre-school education for children 3-7 years of age, to raise the wages of pre-school education system employees, to ensure their professional improvement, including through the switchover to new pre-school education standards and through the development of various forms of pre-school education.

We have currently coordinated 82 roadmaps in the education-restructuring sphere. We have failed to coordinate these roadmaps for one region so far. Under these roadmaps, all objectives being stipulated by your executive orders will be accomplished in full. And we will also attain all targets being set forth by your executive orders. We would like to draw attention to the fact that certain roadmaps that we have seen are hard pressed for financial resources. In effect, the relevant task has been set, and the required resources have been calculated. However, regional budgets do not stipulate the relevant funding. In all, we need 2.7 trillion roubles in order to accomplish all these objectives in 2013, 2014 and 2015. Regional budgets currently stipulate 1.9 trillion roubles. Therefore there is about 750 million roubles that lack any sources of funding today. The Ministry of Education and Science and the Ministry of Finance will have to analyse regional budgets, their sources of revenue and their expenditures in order to accomplish this objective.

Of course, we are now monitoring the implementation of these roadmaps’ projects on a quarterly basis, and we will continue to do this in the future. We are doing this in cooperation with the offices of Presidential Plenipotentiary Representatives in Russia’s federal districts. Certainly, an entire range of our projects requires additional methodological support. We have drafted about 20 various methodological documents for the regions, and we will continue to do this because these documents, especially if they play an important role, must be drafted by us with due account for the current regional experience. Many regions have been working in the relevant areas for several years. And we must assess all the best practices and spread them to the greatest possible extent in Russian regions during our work. Thank you for your attention.

Vladimir Putin: Thank you, Mr Livanov.

Mr Vladimir Medinsky, you have the floor.

Vladimir Medinsky (Minister of Culture): Mr Putin, Mr Medvedev! The presidential executive orders and relevant instructions support the current work of the Ministry of Culture, extend and strengthen the main areas of its work and are a clear and understandable guide for our activities. The executive orders cover an extensive range of cultural issues – from raising the levels and the number of grants and scholarships offered to young culture workers, creative teams – to developing a mobile museum fund, creating virtual museums, digitising, developing professional standards and so on. First of all, I’d like to highlight the fact that we view these executive orders as a guide for action, and not as dogma. I mean that wherever possible, where we can improve the indicators within the available funding, implement the executive order not by 2018, but earlier, construct a greater number of facilities with the same money or put on more events – we will do our best. For example, I will cite one subparagraph of the executive order (a long-awaited subparagraph for our regions) on building at least five culture development centres in small towns. This is a great idea because such an integrated centre includes a performance stage, an educational complex, an exhibition complex, a small hotel and even a fitness centre.

After announcing a competition among the regions for land plots and projects, we received about 100 applications and understood that regions are able and want to co-finance such projects. Therefore we believe that within the established timeframe we will be able to construct not 5, but 8 or even 10 such complexes with regional participation.

The key part of the executive orders is raising the salaries of cultural workers because traditionally they have been underpaid. I will brief you on this point.

Regarding regional and municipal cultural institutions, last year wage growth was symbolic in nature, at 5.6%. In the first quarter of 2013, this increase was 8.8%. So at the end of the first quarter of 2013, the average wages of cultural workers in the regions reached almost 13,500 roubles. The leaders among Russian regions in terms of raising wages are the Nenets Autonomous Area, Tula, Oryol, Kursk and Tyumen regions, Khakassia and Mordovia. In these regions the wages of cultural workers grew in absolute terms – although they had a very low starting level – nonetheless they increased by over 30% this quarter compared with the first quarter of the previous year. Unfortunately, in some regions this correlation to the average wage, even taking into account the increase, did not improve but in fact deteriorated – this refers to the Republic of Sakha (Yakutia), Nizhny Novgorod Region and Chelyabinsk Region. By late 2013, according to our roadmap, these regions are expected to reach the minimum acceptable level of correlation between the wages of cultural workers and the average regional wage – 56.1%. The Ministry will cooperate closely with regions on this.   

Of course, we understand that approximately one-third of regions are facing significant problems with respect to funding the executive order. We have developed a method, and based on this method all regions submitted to us their roadmaps. I want to say that the most promising and exemplary roadmaps come from the Tambov Region (they promise to reach 80% of the average regional wage by the end of the year), Samara Region (78%) and the Nenets Autonomous Area (72%).

Despite our financial difficulties we are trying to bring federal ministry support for implementing federal projects and federal construction projects into line with regional efforts to raise wages, because we believe that it is inadvisable to build and create new cultural institutions in those regions where they are not trying to raise the wages of cultural workers: it is not right to erect luxurious offices for cultural workers who have very little to live on. 

On a separate note I’d like to mention the pay situation in federal cultural institutions. In this case, Mr Putin, following your decision to allocate an additional 4 billion roubles in late 2012 to raise the wages of federal employees, we reached the following indicators: last year average pay increased by 36% (mostly in the second half of 2012), by 8.7% to 28,800 roubles on average in federal institutions in the 1st quarter of 2013. In some cultural institutions, for example, in 11 regional museums under the control of federal agencies, pay levels are even higher than the regional average wage. For example, Kulikovo Field, the Vladimir-Suzdal Museum Complex, Aleksandrovskaya Sloboda and some others.

It is important that wage increases are not reduced to a question of equal distribution. They should be dependent on improving the quality of the work of an institution; these institutions should extend their opening hours in the evenings, regions should reorganise and optimise cultural institutions (in this case, federal agencies have some reserves for this) and they should actively seek additional, non-budgetary funding sources.

In addition, we are closely monitoring the salaries of the heads of cultural institutions – taking into account creative activity – of course this is a rather sensitive issue. We have established a correlation of 1:8, directors' salaries cannot exceed the average salary in the office by more than a factor of eight. So, if you want to earn more – ensure efficient work and raise the salaries of your employees.

On the whole, we believe that with the current rate of wage increases we will be able to implement the presidential executive order on raising wages in federal cultural institutions earlier than is envisioned in the executive order, in 2018. Thank you.

Vladimir Putin: Good. Mr Topilin, go ahead, please.

Maxim Topilin (Minister of Labour and Social Security): Mr Putin, Mr Medvedev, colleagues! Over the last year, the Ministry has focused on the priorities set out in your executive orders and instructions. They include the development of labour relations, increasing wages, providing financial support and creating jobs for the disabled, introducing new measures to support women with children, demography issues, and of course the pension reform.

We have also focused on the work with the regions and on preparing various guidance materials, which we did together with public organisations representing various categories of citizens. 

As for wages, we have prepared all documents included in the programme for gradually improving the remuneration of labour for public sector workers. The documents include those regulating the order of providing income records by heads of state-financed organisations and inspections of them. These documents were signed in March, and by May 1, all heads at the federal level were supposed to fill them in. This work will be analysed and reported on.

Another important issue is the adoption of a standard labour contract setting out a specific ratio between the average salary of the head of an institution and the average salary of its staff. After the document is sent to all ministries, agencies and state-financed organisations, labour contracts will be revised. This work will be carried out alongside a gradual increase in salaries.

We are working in close cooperation with the Federal Service for State Statistics on preparing the first report, which has also been prepared in order to implement the executive orders. This is the first report on salaries for the 1st quarter of the year. For the first time we will get official statistics on the ratio of wages in various categories which are earmarked in the roadmaps for the first three months of the year.

We have also agreed upon roadmaps for social support with the regions. You mentioned the roadmap for Arkhangelsk, which I will report on a bit later. We need to review them again, but they have all been agreed upon. According to our estimates, we are expecting a growth ratio of social workers’ wages from 37% to 47.5% and 37 regions are already seeing this increase. I must mention that the regions have problems with financing the pay of social workers. We are monitoring the situation and looking for additional sources of funding. We need about a quarter of the total volume, and we think that the regions cope with the task.

I would also like to note that we are improving social services and reforming them in accordance with the draft law on the foundations of social services, which was introduced to the State Duma at your request. This draft law was introduced to the Duma on March 30 and is scheduled for its first reading. It will also lay the foundation of the modernisation of the social services system.

I also want to mention the issue of professional standards. In 2013-2014, we need to formulate and approve 800 professional standards. We have prepared the legal framework and the model, approved guidance recommendations and a schedule and have announced competitions. The priority is to prepare professional standards for the workers in the public, healthcare and education sectors. We will do this in 2013.

Speaking about new jobs for people with disabilities – the objective mentioned in the order, implies creating new jobs for the disabled twice as efficiently as before. Our goal for this year is 14,200 jobs. The full funding has been sent to the regions and over 1,000 jobs were created during the last quarter. We pay close attention to the strategy and management of this task.

In addition to this, the Government has drawn up two supporting bills. They were submitted to the State Duma in April. The bills are supposed to authorise the ministry to set requirements for workplaces based on the various disability categories in order to avoid any misinterpretation as to whether the workplace is complying or not. The bills are to be approved soon. Our goal is to provide the disabled with the same employment opportunities as other job seekers. The current proportion of the disabled to healthy workers that get employed is almost one to two. We can see from the ongoing evaluation of the employment for the disabled programme that it will have to be extended. The detailed surveys and collaboration with public organisations show that nearly 200,000 disabled people need adapted workplaces. Therefore, we must continue to work on this.

I’ll  describe the status of the third child benefit shortly. We started this programme in cooperation with the regions. I’ll mention two figures. As many as 36,000 couples had a third child or more in the 50 regions that we are co-funding. The child benefit has been provided to 14,000 families, which accounts for 40%. We presume that this is a common result because typically parents apply for child benefits about four months after the baby is born. The figures will be changing constantly and we are monitoring the progress in the regions.

And the last issue concerns the preparation for pension reform and new pension calculation rules. Mr Putin, we have worked out certain proposals and they have been heard at several Government meetings. We are reaching an agreement with the ministries and government agencies although there are still points to discuss. But generally, the new pension rules provide for more efficient recording of years in service, the pension rights for people aged 35 and older, and motivation for later retirement. We are currently finalising this work according to your instructions to complete the detailed public discussion until August 1. We have already begun discussing the proposals regarding the new rules with the parliamentary parties of the State Duma and the Russian trilateral commission, our major partners in terms of pension reform approval. We are to finalise this project before August 1.

We have also developed opinion polls to be distributed by our best opinion poll organisations. The interviews and pension calculators are in the final stage of development.

As for your instructions to extend the deadline for people to choose the proportion of the pay-as-you-go component and funded component of the pension, we have also worked this out and sent you a report the other day signed by Deputy Prime Minister Olga Golodets.  In the report we stressed that people should be able to make a choice until 2015 since the new pension rules will be introduced on January 1, 2015. We also mentioned in the report that we have drafted a related bill and it will be submitted to the State Duma in July. We assume our citizens should be granted this right.

As far as pension related bills are concerned, we hope to be able to submit them to the State Duma in September along with the budget. A thorough public discussion of the bill will finish in August and all the suggestions and comments from the public must be taken into account. Thank you.

Vladimir Putin: Mr Topilin, you and Ms Golodets as well as other Government members are dealing with a difficult task.

Nevertheless, I can’t help but remind you of the previous state of things. Only recently, many of you were saying, “The formula must not be changed. We should introduce a new 4% and 2% extra benefit [for hazardous employment] and the rest should remain the same.” We agreed to give it some time – a year – for the formula to be developed and the new rules to be introduced in January 1, 2014. Now you are telling me, “We are acting according to your instructions to postpone the introduction of the rules until 2015.” I did not give you any such instruction. If you think you are not ready now and the introduction of the rules needs to be postponed, we need to discuss this. I assume that a serious step like this requires thorough preparation, this is true. But you shouldn’t make me responsible and claim it was my instruction, because I didn’t say this. I told you that you should tell me if you are not ready. I suggest we openly discuss this very complicated issue. Still, we can’t drag it out forever. I’m sure you agree. But this was just a comment. We will talk about it in more detail, but a little later.

Mr Slunyayev, please.

Igor Slunyayev (Minister of Regional Development): Mr President, Mr Prime Minister, colleagues, Presidential Executive Order No. 600 gave a boost to housing construction and marked the start of the housing and utilities sector reform by setting clear objectives and providing a practical algorithm for the actions of executive bodies. There are four executive orders that contain 23 instructions to the Ministry of Regional Development, of which seven have been taken off permanent review mode or have been fulfilled, 2 are pending in the President's office, while for 14 instructions within the framework of May's executive orders the deadlines have not yet arrived or they have been postponed.

In 2012 we built 65 million square metres of housing, twice as much as in 2001 and more than in any year since 1990. The trend remains positive in the first half of this year.

Mortgages have increased. In 2012, 691,000 mortgages to the value of over 1 trillion rubles were issued, which is 1.3 times more than in 2011. Reducing mortgage interest rates is a key area. As of March 1 this year the rate was 12.8%. We propose to lower the cost of mortgages by increasing the volume of the construction market, by holding back the growth of commissions charged by the banks and by developing mortgage insurance and increasing the market supply of long-term and cheap money.

Work is underway to liberalise the land market for comprehensive development. Pilot projects for granting free land to the winners of auctions in which the bidder's offer was lower than the starting price have been launched.

There are 44 housing construction cooperatives being put together right now, and I must say that the number of applications from Russian regions is rising steadily.

The main stumbling block is that so far all these activities cover only federal land plots, and it is our task to spread this positive experience, these practices, to municipal and regional land. It has to be said that these measures can only be effective if the state and the local government bodies assume the obligation of providing land plots with engineering and utilities infrastructure and actively create new jobs.

To reduce construction costs a register is being compiled of replicating projects which includes the best model project documentation. Its use would save money at all stages, from design to construction. The construction materials industry is being developed, the project cost estimate and pricing system is being improved and a single electronic register of people eligible for housing benefits is being created. We expect that all these measures, coupled with increased household incomes and the lowering of inflation, will enable us to achieve the key targets by 2018 and positive dynamics in implementing the May executive orders will yield the desired effect.

Formation of the rental housing market. The basic draft law has passed its first reading in the State Duma. Pilot projects have been launched in 16 constituent entities of the Russian Federation, rented housing is typically being built to relocate residents whose housing conditions are in need of improvement or in order to attract qualified specialists into the industry.

Another area of work is improving the housing conditions of families with many children. There are more than a million such families in Russia, of whom 267,000 have applied for plots of land. As of April 1 2013, 69,000 such families (one in four) have received such plots. However, we have to keep in mind that the cost of engineering and transport infrastructure is often more expensive than the plot of land. The Ministry of Regional Development has prepared amendments to the Housing and Land Codes, whereby a family would be offered a choice between obtaining either a plot of land or council housing. Eligibility checks for improved housing conditions will be introduced.

I would like to say a few words about compliance with the executive order dealing with the development and reform of the housing and utilities sector. The Ministry of Regional Development has carried out a lot of work to improve the legal framework in this sphere: since 1992, 150 federal laws and 2,600 regulations have been developed and adopted. The most significant of these include the law on a new system of major repairs, the law introducing long-term tariff regulations (3-5 years), the law extending the activities of the Housing and Utilities Reform Fund, the law prolonging the minimum effective term of technical requirements for access to engineering infrastructure (to 3-5 years). All these legal acts are aimed at attracting investment into the industry.

We believe that in order to attract massive investment into the housing and utilities sector we have to speed up the implementation of the programmes of comprehensive development of the utilities infrastructure, bringing the national power and gas industries on board as well as solving the problem of the issue of ownership rights to the utilities and parcels of land on which they are located. Even in the best performing regions the share of engineering networks that nobody owns is still high and land and property rights are for the most part not properly formalised.

Another key area of our work is fulfilling your instruction, Mr Putin, on keeping the total amount of utilities rates paid by people down to 6%. The Ministry of Regional Development, jointly with the Federal Tariff Service and the Russian regions, has taken action to reduce and revise downward the rates where they have been raised without good reason.

Resolution No. 344, the so-called updated Resolution No. 354, passed on April 16, restricts payment for general housing needs to no higher than the consumption quota, makes the relationship between suppliers and consumers of utilities services more transparent and encourages the installation of individual and house meters.

We are committed to linking tariffs, consumption quotas, the total payment and social support measures. Two milestone dates that lie ahead are July 1, 2013 when planned tariff increases will take place and September 1, 2013 when the heating season begins. It is essential to prevent a leap in utilities rates and to make the process of payment charges more transparent. This is one of the main aims of the state housing and utilities information system on which a draft law has passed its first reading in the State Duma.

One more thing. Pursuant to Executive Order No. 600, the Ministry of Regional Development together with the Public Chamber are organising a system of public monitoring of the housing and utilities sector and have developed methodological recommendations for the regions. Public monitoring centres have already been set up in 37 regions and are in the process of being set up in 35 regions. These centres are very helpful in removing systemic problems that lead to violations of people’s housing rights.

The state must solve the issue of regulating the management of the residential stock. There are various instruments for that, including preliminary qualification, licensing and self-regulation. The law on self-regulation has been pending in the State Duma for three years and its adoption keeps getting postponed. It is important that a decision is made.

Another important area is demolishing decrepit housing unfit for habitation. As of January 1, 2012 the size of this housing stock is over 10 million square metres, with 700,000 residents. In accordance with the instructions you issued in Elista we have finalised the set of measures to demolish run-down housing and will submit it to the Government within the next few days. We hope that this set of measures will be approved by the end of May. Thank you.

Vladimir Putin: Thank you very much. Denis Manturov, please.   

Denis Manturov(Minister of Industry and Trade): Mr President, colleagues.

The Ministry of Industry and Trade has fulfilled all the tasks set out under the executive orders of May 7. This work consists of three main blocks: the development and implementation of state programmes of industry development, modernisation of the defence industry complex and upgrading corporate governance at the enterprises within our jurisdiction. I will speak briefly about all three of these areas.

In late 2012 the Government adopted five state industrial development programmes: aviation, ship-building, radio electronics, pharmaceutics and the medical industry. The fifth programme, development of industry and enhancing its competitiveness, is a comprehensive programme that concerns a number of sectors and areas. These documents take into account all the indicators contained in the executive orders. During the past year the sectors under the jurisdiction of the Ministry of Industry and Trade, including retailing, saw the creation of 40% of all highly productive jobs and over 40% of all the technologies. Labour productivity in the industries under our jurisdiction has grown by 5.5%, which is not bad, but still not good enough, in our opinion. We hope that as the state programmes hit their stride the dynamic will improve.

Indeed, during the course of this work we have come to the conclusion that in 2013-2014 we should update the entire body of strategic documents, taking into account the switch to new methods of forming the budget and the need for coordination with other state programmes, including socially-oriented ones.

For instance, the state programme Development of the Pharmaceutical and Medical Industry is making a substantial contribution to fulfilling the healthcare tasks you have set. Last year we met the target of 63% domestically produced vital drugs. Moreover, all the key targets that were set under the Pharmaceutical Industry Development Strategy to 2020 were exceeded in 2012.

The second block is modernisation of the defence industry complex. The Government has approved a detailed plan of measures to fulfill the basic Executive Order No. 603 dealing with the development of the Armed Forces and modernisation of the defence industry. The plan is running strictly on schedule. The main strategic document is the federal targeted programme Development of the Defence Industry Complex in 2012-2020.

In 2012, retrofitting covered 500 enterprises, and new facilities have already been put in operation at 35 of them. They will ensure the production of cutting-edge weapons, envisaged under the state munitions programme. As part of developing public-private partnership mechanisms, the Ministry of Industry and Trade has developed and the Military Industrial Commission has approved the concept of the use of PPP mechanisms in the defence industry sector. That initiative would simplify the procedure of establishing new defence production facilities and attract private investments into our defence industry. The concept involves a broader exchange of information between private investors and defence organisations, including gradual easing of the secrecy regime.

The concept of life-cycle management of military products is being actively introduced after being tested in pilot projects such as Uralvagonzavod, the Unified Aircraft Building Corporation, Vertolyoty Rossii and Oboronservis. The Ministry of Industry and Trade is actively involved in the complex of measures to improve the system of vocational training for the defence industry sector. We have compiled a list of the 120 professions that are in the highest demand in this sphere, which will form the basis of modern professional and educational standards. As of the end of last year employees of the defence industry sector have the right to join housing construction cooperatives on land belonging to the federal fund for the development of housing construction. That initiative, according to experts, would cut the cost of housing for these employees by 20%.

The third block is improving corporate governance of integrated structures. To make the management of the economic activities of defence industries more efficient, the Ministry of Industry and Trade has approved a system of indicators and a procedure of comprehensive assessment of the status and development dynamics of defence industry organisations. The fulfillment of that instruction under the executive order On Long-Term State Economic Policy was closely linked with a review of the effectiveness of state-consolidated companies. As a result of this work we have formed a system of regular monitoring of such structures and annual reports to you. Thank you.

Vladimir Putin: Thank you. Nikolai Fyodorov, please.

Nikolai Fyodorov (Minister of Agriculture): Thank you. Mr Putin, Mr Prime Minister, esteemed colleagues. Pursuant to the executive orders our Ministry was to work out and submit two state programmes, for the development of agriculture and for the development of the fisheries industry. Both programmes have been passed by the Government on time.

To save your time I will highlight the key approaches contained in these state programmes. First is promoting not simply the production of agricultural raw materials, but of a quality end product that meets the needs of the consumers and the challenge of growing competition. We pay particular attention to the development of the modern processing industry. For example, under the state programme in 2008-2012 we planned to export 13 million tonnes of grain a year, whereas in reality we exported 18 million tones a year. This would seem to be cause for rejoicing except that in reality we were exporting agricultural raw materials. We should seek (as the state programme envisages) to process grain, to add value to yield greater benefits for our consumers and for livestock development. The new state programme will treat that as a priority.

Second, support measures should depart from direct loan subsidies, which consumed sometimes up to 70% of the former state programme funds, in favour of direct payments to farmers. We are talking about subsidies per hectare of land under crops, per kilogram of marketable milk. For example, by April 15 of this year we transferred more than twice as much federal money from the budget to finance the spring field work than by the same date last year. The farmers appreciate these moves and are already responding positively. It is too soon yet to speak about final results, but we hope that this will prove to be a more valid approach, considering the results of the previous state programme.

Third, more attention has been paid to the sector’s structural problems, i.e. support of small and medium-sized agro businesses, the development of rural infrastructure, innovations, the creation of a social catering system, something that did not exist at the federal level before. Of course, these aspects of federal policy need to be strengthened considerably.

A new reality for Russia is its accession to the WTO. It is an ambivalent event, the impact of which on agriculture has been mixed. The first signal was the situation in pig breeding, so the Government has already taken measures for the current year to ensure the profitability of pig breeding and poultry industries. On April 25 the Government authorised additional allocations in support of the livestock industry in the amount of 11.800 billion roubles, over and above the 6 billion roubles allocated at the end of last year in connection with the drought in 20 regions. But we need further support measures in the medium term. We are considering ways to support pig and poultry production and some types of plant growing, such as rice growing and greenhouse vegetable growing. The Government essentially supports these measures and is aware of their relevance, as reflected in the Government resolution of April 25 passed after the national report on the fulfillment of the 2008-2012 state programme.

Under the Fisheries Industry Development state programme, the principle of the regions contributing to financing the programme's activities will be applied in the fisheries industry for the first time. To make these measures effective the Ministry of Agriculture plans to sign agreements with the executive bodies of the regions, drawing on the experience of the implementation of the state agriculture programme. There was no such institution in the fisheries industry before.

The state programme also envisages the introduction of pilot fishery technoparks which will make up the full cycle, from production, primary treatment, production of the finished product, storage, packaging, marking, transportation and sale. 

And to conclude. If I were to name the single most important problem facing Russian agriculture, based on analysis and the opinion of practically all the experts, it is creating conditions for normal civilized life in rural areas. This calls for additional attention. The fulfillment of the state programme, the federal targeted programme for 2003-2012, had run into some problems, and not all the targets, especially as regards financing, have been met. The droughts, which have been more frequent than in previous years, may have played a big part in that. For example, there were three serious droughts in the last five years which made it necessary to transfer resources from the federal targeted programme Social Development of Rural Areas to agricultural production itself. Nevertheless, the targets for gasification and water supply were met and even exceeded. There are some shortfalls in housing construction. I would like to draw your attention, Mr Putin, to the fact that under the law, social development of rural areas is (quite rightly) within the competence of the regions of the Russian Federation. I think I can safely say this, because under the current legislation, the federal budget co-finances the projects developed by the regions of the federation. So, the current provision of the state programme – constant and steady growth of federal support for the social development of rural areas – is a great thing. Now that the Agriculture Ministry is signing additional agreements with the regions, we will closely monitor whether the region treats the social development of rural areas as a priority, because it is impossible to manage regional priorities from Moscow. But through the common efforts of all my colleagues in Government we will manage to get the regions to treat the social development of rural areas as the main factor that will provide human resources for the agro-industrial complex. Thank you.

Vladimir Putin: Thank you. I think the plenipotentiary presidential representatives in federal districts may have something to say by way of a discussion. 


Vladimir Putin: Dmitry Medvedev, please.

Dmitry Medvedev: Thank you. Mr Putin, colleagues, just a few words in closing. The goals stated in the presidential executive orders signed a year ago are very ambitious and complicated, and our citizens can’t wait to see them achieved.

In order to achieve them, we need to concentrate our efforts, as Mr Putin rightly said. We should help each other at all levels of government and use every avenue in order to get there. Any shortcomings must be addressed, and we must also work together on this. 

The President mentioned two issues in his remarks. The first concerns the pension programme and the proposals that are now being widely discussed. Clearly, we need to create an environment where citizens will be able to make an informed choice, as the President said. I believe we should expand the range of possibilities, as the ministers said, and it would be better to allow more time now in order to figure things out than to deal with these uncertainties later and have to explain to people what we had in mind, what worked and what didn’t. I'm saying this because I support the idea of extending by one year the period in which people can decide how much they want to invest in the unfunded system and how much in the funded one, because I believe it would be useful. This issue should be further discussed by experts, as Mr Putin and I agreed yesterday.

There’s another important issue about creating additional places for children in preschool educational institutions. As you may know, we need an additional 1,200,000 such places. The regions should create approximately 400,000 places, alternative preschool institutions should provide another 400,000, and the federal government has allocated 50 billion roubles that will go to the regions this year already. Why am I saying this? Indeed, it is important to monitor the effectiveness of spending. This task should be handled by the Government, by the relevant ministry. However, we should work in conjunction with the regions; therefore, I’m asking for the support of the regional governors and presidential envoys in federal districts, because if we inject extra money into the system, we need to know that these funds will be used to create additional spots for children in kindergartens, not something else, because that's a lot of money and allocating it for this purpose wasn’t an easy decision for the federal budget.

Everything else that Mr Putin mentioned in his remarks and the ministers outlined in their comments must be fulfilled on time. Thank you.

Vladimir Putin: Colleagues,

We had a very important, timely and rather frank conversation today. I want to stress again that we can only properly get through this highly difficult period, manage the trials faced by the entire world and the global economy, and resolve difficult social issues that are essential to our country by maintaining a momentum of development, increasing the efficiency of our efforts.

As I said earlier, the quality of our decisions and the efficacy of our governance are key necessities in today’s world. We should fully eliminate all forms of disorderliness, lack of discioline, inefficacy and bureaucratic delays. I expect full composure and responsibility from all of you. It is imperative to act more quickly and more efficiently – this is true for the Cabinet and for Russia’s regions.

It is unacceptable when the most important steps are hindered by somebody’s unwillingness to take personal responsibility, when programmes tumble because of weak cooperation between ministries and agencies or due to a lack of clear recommendations to regional authorities on the part of the federal government. To conclude, I believe the following matters must be taken into account.

First of all, we always have to remember that we are working for people, not for the sake of reports. The main results of the work should be real changes that improve people’s lives, new quality of the economy and the social services. The statistics and accountability game does not just discredit individual managers and officials, regardless of how high their ranks are, but all of our work and all of our efforts as well.

Second, we cannot lose sight of the overall logic of systemic transformations in the economy and the social sector when dealing with the details and individual events, including the vector predetermined within the framework of already implemented priority national projects and projects to modernise education and healthcare in the Russian Federation’s regions.

Working under the “add a little money here, patch things up there” strategy will essentially fail to improve anything. We need structural transformations. Pouring a little money here and there without structural improvements is a road to nowhere. And you probably know this; indeed, you certainly do.

Today, during our discussion, this was confirmed yet again. Systemic transformations are to be conducted right now, without leaving anything for later. Otherwise, we cannot resolve the problems before us, that would simply be impossible.

And finally, let me draw your attention to an important point we already discussed today as well. The implementation of executive orders is not some sort of addendum to the current goals of the Cabinet, federal agencies and regional authorities. I want to warn you against this kind of permissive, superficial approach. Executive orders are the strategic foundation for the work of our entire system of government. I hope that all of us together, and myself in particular, will monitor the fulfilment of the set objectives in the strictest possible manner.

Friends, we are facing some genuinely major challenges and it is indeed difficult to fulfil them as they require major efforts and the mobilisation of all our resources. But I am confident and will repeat again that if we organise our work adequately, all these objectives are entirely realistic.

The executive orders of May 2012 outlined 6-year plans. A year has passed, and only five years remain. It is true that many projects have been launched. But frankly, so far, there are very few visible changes. We all must ensure tangible progress every year; every year we must see forward movement, advances toward the ultimate goals, hence we do not have the right to simply claim that since these objectives are long-term in essence, one can see no improvements at this stage, or can only see little improvements, but that this is normal for long-term programmes. I want to tell you clearly: this approach is wrong.

If we fall behind on addressing some problems, we will end up failing all or most undertakings while our people expect visible results and changes for the better in healthcare, education and other key areas. So we will judge the competence of the Cabinet and the regional authorities based on these changes, or lack thereof.

Let me stress that if we want to fulfil the objectives we have set, then we must constantly move toward this goal every year. The work is underway, but I must say that today, few people in our society are aware of how it is progressing while the essence and substance of this kind of work should be clear not just to the Government, ministries, agencies, regional authorities and the President, but also to the people and to society overall.

Based on the outcomes from the first year of implementing the executive orders, we can see there is some progress. But purely bureaucratic responsibility does not work well. I believe that each of us must accept public, political, personal responsibility, including each member of the Cabinet of the Russian Federation. We are to remember that every ministry and every agency has its own development plans so I am asking you to coordinate these development plans with the objectives laid out in the President of the Russian Federation’s executive orders of May 2012, and make the corresponding adjustments for the next five year period and for each one of these years.

Each minister must see and understand what specifically he or she is going to do over the course of the year aiming to implement these executive orders, what results he or she will reach and state it publicly, so that his or her actions and objectives for the year become public knowledge.

I ask you to draft such plans within one month, to make them public and submit them to me. Let me repeat it must be done within one month. At the end of this year, I will meet with each of you personally to discuss the results of your work over the year, and I will publicly hear reports on the results achieved.

Colleagues, I am asking you to take the issues raised at today’s meeting very seriously and I count on our joint, effective work.

Thank you.