Speech by Dmitry Kozak:

Good morning,

Today's meeting of the Board of the Ministry of Regional Development is an important day for regional politics. This is an opportunity to discuss the key issues of our country's life that are within the Ministry's scope of responsibility and are part of the Ministry's plans for the future.

The scope is extremely broad. First of all, it is regional policy, that is, the relations of the federal centre with the regions and with local self-government bodies. How effectively and clearly the federal centre determines the powers, degree of independence and responsibilities goes a long way to determine the well-being of our country and the level of our society's development.

I would like to remind you that in their entirety regional and municipal authorities, in their practical activities, exert a far greater and more immediate impact on the country's development and on how society feels than all the federal executive bodies taken together. Their motivations determine the effectiveness of their work and the end result of the efforts of the state and all public power bodies. This is above all what we should focus on.

It is also necessary to complete the development of a conceptual approach to regional policy for the short term, to approve the strategy for improving regional policy and launch its implementation. That systemic document calls for a contribution from all the federal executive bodies which must introduce adjustments to their relationships with the regional and, through them, with municipal authorities. The effectiveness of our joint work to exercise diverse powers in the economic and social sphere hinges on that.

I would like to remind you that later today the Ministry of Regional Development will submit to the government a tentative report on the results of its work to bring the tariffs, rents and utilities costs in accordance with the existing legislation, the level of the country's social and economic development and the level of people's incomes.

We must, as part of that work, ensure predictability and transparency of the actions of the federal executive bodies which influence the activities of regional and municipal authorities. I am referring to issues of strategic planning, the development of the federal infrastructure, spatial planning, the relationships between the federal budget and the regional and municipal budgets. This is not just fiscal policy; this is a key instrument of regional policy that must be predictable.

The responsibility does not rest only with the Finance Ministry and the Ministry of Economic Development. Above all, formulating these objectives, the rules and mechanisms of such relations is the task of the Ministry of Regional Development. And I would urge you to take a more principled and firm stand with regard to other executive bodies in upholding the principles that have often been mentioned but have not yet become the rule for the whole country.

The development of public-private partnership is a key area of the Ministry's work. The Investment Fund was mentioned earlier. A good deal of work has been accomplished. I would like to express my gratitude to Vladimir Tokarev, the Deputy Minister, who has done much in order to, at long last, make this instrument transparent and effective in implementing major investment projects and regional investment projects. We should now finalise the details on that instrument and provide it with inputs so that it can start functioning in accordance with the rules worked out by the Ministry and the government, which gives us hope that this instrument will be effective.

An important area of the Ministry's work is developing government policy in the sphere of housing construction and utilities. This is a key sector of our economy and a key social sphere. It is necessary to develop the relevant targeted housing construction programmes for the next five years. This means not simply extending the time scale of the Housing Programme, but also identifying new mechanisms and new principles to address the problem of housing construction over the next five years. It is necessary to contribute to the development of the Housing Construction Fund, whose programmes are showing great promise of being effective once the financial and economic situation in the country is back to normal. That programme must also involve the Agency for Housing Mortgage Lending and housing construction in order to step up the pace and improve the quality of housing construction.

The housing and utilities sector. I have just mentioned tariffs and the rates paid by families. There is a far more important step to be taken if we are to attract private investments into this sector. That involves a multitude of federal legislation that should be corrected and adjusted in order to make that sector accessible and attractive for private investment. Above all the activities of the municipal authorities must be properly regulated so that they too have an incentive to attract private investments and to prevent abuses in that sphere, which, unfortunately, constitute one of the main obstacles to investments in the housing and utilities sector.

We should give thought to how the Ministry can follow up on the reforms, which today are financed on a considerable scale by subsidies out of the Housing and Utilities Reform Fund. You know that Law No. 185 sets the long-term priorities for the reform, but subsidies will last only until 2012 whereas reforms will need to be continued. The Ministry will continue to be responsible for monitoring the transformations in the housing and utilities sector that began in the preceding three years.

Construction is another key area of the Ministry's activities. I would like to draw your attention to the tasks we need to focus on in that industry. Above all the removal of what can only be described as incredible administrative barriers that have been built up in recent years. This is not a Soviet legacy. This is the result of our own overregulation, which built up the kind of barriers that no private investor or anyone can penetrate. This is a challenge facing the state as a whole. Such major investment projects as Sochi Olympics and APEC test the validity of our policy in this sphere. Just consider: Things have come to such a pass that not only the Ministry, but the government is managing individual construction projects and is making decisions on various specific types of design and construction work.

The task was identified back in the summer of last year. It was set before the Ministry of Regional Development and the Ministry of Economic Development. Unfortunately, the specific targets were not set until early this year. They only recently got the Prime Minister's final approval. A corresponding list of assignments has been drawn up and I ask you to keep it under special control. These instructions are being monitored by the government of the Russian Federation so that all the federal executive bodies that have to do with these "barriers" should fulfil all the assignments within the harsh deadlines envisaged by the action plan. We should clean these "Augean stables" by the end of the year.

Interaction with the newly formed self-regulating organisations is a major issue. Unfortunately, self-regulating institutions have not been formed in a very logical or effective way. It is necessary to proceed carefully and rectify, without any revolutions, everything that has proved to be impracticable in this sphere. The Ministry of Regional Development must first of all concentrate on improving the legal framework and on interaction with the newly formed national associations of self-regulating organisations. Interaction should be on a day-to-day basis. Just recently a decision was made to create a coordinating council for self-regulating organisations. I urge the council to take balanced decisions. It does not mean that everything should be done the way self-regulating organisations want it, as they have their sectoral interests; however, their opinion cannot be ignored, and we must pay attention to it.

The Ministry is responsible for improving the system of prices in the construction industry, and the country's political leadership has repeatedly drawn attention to this. It is necessary to monitor the prices, above all of construction industry products that are financed out of the budget. All the plans and decisions taken must be fulfilled a) on time and b) properly.

The quality of the work to improve pricing is a key issue. We have been receiving signals and complaints that the new government rules for cost estimates do not envisage any new technologies, but simply increase the cost of works and diminish labour productivity. At the same time the construction operations and services remain the same as they were twenty or thirty years ago. I urge you to pay attention to this and take a close look at the situation. If the facts are confirmed prompt measures must be taken to rectify the situation.

Technical regulation issues in this sphere are also important, especially in terms of new technologies and the lifting of administrative barriers. The law on technical regulation in the construction sector has been adopted. It should be implemented, and not by 2012 but, as the government decided, by November 2010. All the mandatory technical standards, whose list is to be approved by the government, must be reviewed and updated before this year is out. This is not an insuperable task because self-regulating organisations of builders and designers are ready to render every assistance. It is necessary to go over the huge body of documents together, so that we have totally new technical regulations by the start of 2011.

Finally, the major investment projects that have already been mentioned here: Sochi Olympics, APEC and the complex of protective structures in St Petersburg. These projects give all of you an opportunity to check how effective our policy is, most notably in the sphere of regulating the relations in the construction sector, in the sphere of land and property relations connected with construction. Simultaneously, there is a chance to correct the mistakes that have been made long before the projects are completed. That applies above all to Sochi because there are a lot of diverse projects and a multitude of agents responsible for them: from federal bodies to local government bodies, plus a large number of private developers.

I would like to once again urge you to regulate the relations with all the agencies responsible, with all the parties involved, and to issue a corresponding government resolution. I had to remind Viktor Basargin, the Minister, that he is personally responsible for submitting that government resolution. It should see the light of day as early as possible so that everybody has a clear idea of where the centre coordinating the activities of the numerous participants in the project is located and so that decisions are taken by the coordinating centres that the government will identify.

The government resolution formulates 90% of the corresponding assignment. The Ministry has still not submitted the relevant resolution. Disrupting the technology of implementing such projects as Sochi is not an option. It is impossible to avoid fulfilling the corresponding decisions and instructions of the government and the president.

Unfortunately, it has been noted that the Ministry of Regional Development is on the list of under-performers in this field. It failed to meet the deadlines for fulfilling a third of the instructions issued to the Ministry by the president and the government. There have been about fifteen cases of non-compliance with the adopted laws and the instructions of the president and the government. That means that the laws passed as early as 2004-2005 cannot be implemented without the rules that the Ministry should develop. It is necessary to rectify the situation. This is a bureaucratic problem.

And please, something must be done about the lag in fulfilling the decisions of the prime minister and the government in the sphere of government policy in the areas for which the Ministry is responsible, especially with regard to Sochi Olympics and APEC. I would like to stress that any delay or failure to meet the deadlines or dereliction on these projects would undermine the international obligations of the Russian Federation to host the APEC Summit and the Olympic Games.

However, I would not like to end on a sad note. I hope that everyone in the Ministry is aware of the magnitude of the tasks facing us and the need to fulfil all the instructions. I would like to thank all the Ministry staff and all those present, those who are going to take part in discussing key aspects of regional policy and to wish you success today and in your work in general and to wish you all the best. Thank you.