Speech at the Meeting with the Cabinet Members, the Heads of the Federal Assembly, and State Council Members
Kremlin.ru
September 5, 2005
GRAND KREMLIN PALACE, Moscow

PRESIDENT VLADIMIR PUTIN: Good afternoon my dear colleagues!

The basic goal of our activities, and a key question of state policy is the substantial improvement of Russian citizens' quality of life.

I called you here today to discuss the creation of new mechanisms to accomplish this task. This meeting's timing was not chosen at random. We are meeting after the Federal Government of the Russian Federation prepared and sent 2006's prospective budget to parliament based on the President's Annual Address to the Federal Assembly. I will not go into the details, but will note only the items most pertinent for today's meeting.

Nominal expenses are set to grow at 24,4 percent. In real terms, this means growth of 14 percent. The economy's growth is forecast at 5,8 percent. Nevertheless, the government managed to balance the budget in macroeconomic terms. However, it was the favourable external economic conditions that made this possible. I ask that you take this into consideration when doing additional work on the budget, and refrain from making decisions that could cause serious problems for Russia's future development. I am confident that you understand what I mean; we can spend only so much as we earn. If we take advantage of the external economic climate that is good for our country today, get bogged down into never ending and over-ambitious projects, then we will be in debt 10 years later on. All of you should realise or must come to realise that if this situation on the world markets changes, we could only finish our ongoing projects by either going into debt or sharply and painfully cutting our expenditures.

Let us think not only of today, but also of our country's future. Moreover, I am convinced that today's Russia offers the opportunity of noticeably increasing the well-being of Russia's people. To achieve this, it is not necessary to disturb macroeconomic stability, nor to suffer from inflation. For this reason, we should not miss out on the opportunities that Russian economy presently offers.

Let me remind you that over the past five years, Russia's economy has grown by almost 40 percent. This rate provided macroeconomic stability. There are several good signs of development of social infrastructure, and of increases in the population's income. But let us be frank, and say that for many people in the country, these figures remain abstract ones. It is impossible to become reconciled to the fact that 25 million of our fellow citizens receive an income of less than the subsistence level and, as such, quality social services are not available to all of our citizens. Very recently we spoke of the fact that 30 million people in our country live below the poverty line. Of course, positive changes have taken place. But we all see that 25 million is a huge figure. The acuteness of these problems and the ways to solve them were mentioned in the Addresses in 2004 and 2005 as a single programme for our short-term activities. This programme is being implemented but-and here I think you will agree with me-extremely slowly.

Today I would especially like to talk about concrete steps towards implementing priority national projects in areas such as health care, education and housing. We have come back to this subject many times. I feel it is necessary to talk about this problem once again.

Firstly, these areas determine people's quality of life, and a society's well-being. Secondly, the solutions to these problems ultimately have a direct influence on a country's demographics and, most importantly, create the necessary preliminary conditions for the development of what we refer to as human capital.

First and foremost, regarding measures in the field of health care.

Let us be frank, and say that people judge the state's health care system by how they are received and helped by a medical station, clinic, or hospital. Here, we must admit that the present state of affairs is inadequate. Radical changes must take place. Special attention must be given to developing primary care, basic medical aid, disease prevention including vaccination, and effective medical examinations. We must limit the spread of infectious diseases, including HIV infections, and implement new programmes for newborns' medical examinations.

What took place here in 1991? We formally and unequivocally made the municipalities responsible for primary care. However, they did not have the ability to independently resolve a number of important problems. The necessary legal foundations did not exist then, and still do not today. More importantly, there was not, and is not enough money. Only now are we talking about dividing power in the way that makes most sense, and providing adequate funding. This job remains unfinished. I ask that the government and everyone involved stop dragging their feet over this issue as soon as possible.

As a result, the situation in primary care has gradually but steadily worsened over the years. We must now clearly concede that the municipal network of health care services is in pitiful condition. I propose that we talk about today's problems not in an abstract way, but in most concrete terms. And we must clearly and honestly say that, without our help, no innovations will take place. This branch of health care services-primary care-must be supported at the federal level.

In the next two years, more than ten thousand municipal clinics, more than a third of them located in rural areas, must be equipped with new diagnostic equipment. The same applies to a significant number of regional hospitals and medical stations. In practice, this is all primary care. Of these, we have a few more than 17,5 thousand but the difference lies in the department's network.

At the beginning of 2006, local therapists', pediatrics', and general practitioners' average salary should rise by ten thousand roubles per month and, as a minimum, nurses' should rise by five thousand roubles. That said, the actual amount must directly depend on the amount and quality of medical services provided. I would like to emphasise that salaries will not rise up to ten and five thousand roubles, but rather by ten and five thousand.

It is necessary to provide for training more than ten thousand local doctors and general practitioners. It follows that we must fundamentally update First Aid vehicles, including through purchasing ambulances, medical equipment, and modern systems of communication.

A special problem is the availability of modern medical technology in cardiology, oncology, traumatology, and a number of other important areas. First and foremost, they must be available for treating children.

The number of citizens who will receive high-tech medical aid paid for from the federal budget should increase by at least four times by 2008. For this reason, it is necessary to improve the effectiveness of existing centres of high-tech medical technologies, and to construct new ones, first of all in the Russian Federation's regions, including Siberia and the Far East.

To accomplish the above-mentioned tasks, I propose to use substantial funds from the federal budget. That said, I would like to make it clear that the plans must be compact and concrete. Modern technologies in construction and in medical equipment will allow this to happen in the short-term. We have the conditions necessary to solve these problems in two years. The work must be started now, right now.

However, the problems of public health care cannot be solved by simply providing more funding. We must take decisive yet prudent steps to modernise the branch as a whole, and we must engage in productive dialogue, including with the medical community.

The next question is one of creating the mechanisms to fundamentally improve the quality of national education. We must finally lay the foundations for innovation-based break-through, and for strengthening the country's competitiveness. It is obvious that special measures of state support to high schools and institutes of higher education actively introducing innovative educational programmes are necessary. In the two forthcoming years, significant sums should be allocated for schools to purchase laboratory equipment and software, and to modernise classes and teachers' professional development. This programme will apply to at least ten institutes of higher education and several thousand schools across the country. During the same period, a minimum of 20 thousand more schools must get access to the Internet. By 2008, such schools should number more than 30 thousand-more than half of all the schools in the Russian Federation. At the same time, modern educational technologies should be introduced, including distance learning programmes. Servicemen must be able to receive diplomas in vocational training from special educational centres, and those on contract must receive the opportunity to prepare for entering institutes of higher education.

In 2006-2007, I ask that we create new universities in the Southern and Siberian Federal Districts, on the basis of already functioning institutes of higher education and academic centres, and that we open business schools for forming administrative personnel in the Moscow Region and St-Petersburg. We believe that regional authorities and individual investors will also be interested in participating in such projects. This said, I would like to note that they should be completely new, high quality, modern educational institutions and centres. We must substantially raise the level of research done at institutes of higher education, and link it to the economy through developing innovative infrastructure. Working at Russian universities must be attractive for highly-skilled experts, including foreigners, and especially the compatriots presently working abroad. To support initiative-taking, capable, talented youth, no less than five thousand individual grants for school children, students and young researchers will be created.

It is impossible to forget that solid, first-class preparation of students and graduate students is the necessary condition for the development of fundamental research. It is necessary to enable youth to enter the academic world, to engage productively in research activity, and to have access to the academic management.

In August I committed to increasing the salaries of the Russian Academy of Sciences' personnel. By slightly reducing the number of budgeted positions, the average monthly wage of qualified academics should grow to 30 thousand roubles in 2006-2008. And the salaries of the younger researchers-the generation on whom the prospects and dynamic development of the Russian academic community depend-must be increased even more noticeably.

Teachers' low salaries are one of the main problems of Russian schools. Let me remind you that the decision to increase salaries for those working in public sector by one and a half times in real terms over the next three years has already been taken. Here, as in public health care, the same problems resulted from transferring services to municipalities without the corresponding support.

It is necessary to eliminate the system whereby a teacher's payment directly depends on the amount of lessons they teach, and to change to a new system. It should be based on the quality of teaching. In 2006, it is necessary to complete the transition to what we call normative financing of the educational process, in which funds follow pupils. Along with this, it is expedient to establish an additional, monthly payment for form masters, including for primary school teachers. As a whole, this concerns about one million teachers. We should remember that school children's upbringing is an important part of the work of educators, and is a very demanding one. I suggest that we create annual incentives of 100,000 roubles for the ten thousand best teachers in the country.

Dear colleagues!

Let us now turn to housing policy and housing problems. In many respects people's health and their family life depend on the quality of their living conditions. However, for many Russian families the possibility of having a more comfortable apartment or house remains only a dream. By 2007, our task is to encourage significant growth in housing construction. Compared with 2004, the amount of construction should have increased by at least a third. For this reason, budgets of all levels must allocate funds for the development of housing infrastructure. I emphasise that budgets of all levels should do this.

Recently, a lot has been said about mortgages. However, in practice not enough has been done. I ask that we complete the legal basis on which to issue mortgage securities. I charge the government of the Russian Federation to develop a mechanism for subsidising mortgage credits, and to considerably increase the authorised capital of the Agency for mortgages and housing credits, after giving it state guarantees.

I direct the government's attention to implementing the new legislation on providing housing for servicemen. Work has dragged on. Within a month, all necessary documents should be coordinated and a high-quality, functioning mortgage system should be in place. From my contacts with servicemen, I know that that they have little information about this. It is necessary to provide proper information.

Regarding servicemen's problems in general, law-enforcement employees must constantly pay special attention to their issues. These people are working for the safety of citizens and the state. Their social security must be a high priority, and take into account the specific conditions associated with serving in the army and in other law enforcement agencies. They must be included in the common logic of our actions designed to improve Russian citizens' quality of life.

A special question is the substantial growth of the federal budget's allocations for supporting young families. The housing problems of young people working in rural areas must be solved. I expect that both regional and local authorities will be interested in participating in this endeavour. Positive examples of such work exist. On a much larger scale, the state has obligations to provide housing for war and military veterans, Chernobyl's victims, invalids, and other categories of citizens. It is necessary to put the rates of those services that have a great deal of social significance, and are regulated by local authorities in order. First and foremost, this refers to public transport, housing, community services, and communications. The Federation's subjects should exercise the right to determine these rates but, to prevent confusion, the rates should not be higher than those determined by the Federal government.

I charge the government with preparing amendments in the legislation, and the regional authorities with breaking the monopolies in housing and community services, the public transport system, and communications. Spending more money is insufficient here. I know and remember that many governors spoke of how, in just a short while-two or three years-the transport system will completely collapse. In the meantime, some funds where allocated to the transport system. I repeat, this is insufficient. These branches must undergo structural changes, as without competition only the prices and rates, but not the quality and variety of services, will increase.

There is yet another fundamental question, that of providing gas. I support Gazprom's initiative to implement a large scale programme for providing gas to the whole country. In the next three years, no less than 35 billion roubles will be spent to this effect. Such a programme is especially necessary for the rural areas of the country. And the improvement of rural life, and the development of the agricultural production is, in my opinion, an obvious priority. Today, the percentage of people receiving a wage below the subsistence level is at its highest in agriculture. Poverty and unemployment induce the loss of life goals, cause alcoholism and other problems. Moreover, many agricultural enterprises demonstrate that the Russian village can and should be economically successful and attractive to investors. We have already managed to attain significant success in grain manufacturing. From being an importer, Russia changed to being an exporter. Recently, I had quite a few meetings with agricultural workers. I completely share their opinion that agricultural production, including farms and part-time farms, should benefit from more support, and that special attention must be paid to improving conditions for livestock breeding. Agricultural businesses should get real access to credit. The federal budget must allocate additional means to subsidising interest rates on farm credits. In 2006-2007, a system of land mortgages, designed to attract long-term funds under attractive conditions by using land as a collateral, must be created.

It is necessary to provide an impetus for the creation of preparation, supply, and sales structures, plants that process agricultural products, and of credit cooperatives. This must substantially increase the volume of production, eliminate the distributors' monopolies and therefore raise the incomes of the agricultural producers.

I ask that we provide additional means from the federal budget towards subsidising interest rates on credits of up to eight years, for the construction and modernization of livestock breeding facilities. Rural workers, and those with whom I met and whose achievements allow me to completely trust their judgement, have asked about it. I absolutely support them.

Significant resources must be allocated to the development of agricultural leasing. Within two years, it should allow the country to have tens of thousands of livestock, as well as technical equipment, and equipment for livestock breeding.

Customs and tariff regulations need to improve quotas on foodstuffs. That said, their implementation must certainly not create deficiencies in the food industry. I have already given the corresponding orders.

In addition to this, I think it is expedient to cancel import duties on technical equipment for livestock breeding that is not produced in Russia. As a whole, I believe that it is necessary for the government to resolve issues related to the substantial lowering, or even cancellation of import duties on imports of technological equipment that does not have a domestic competitor for other branches as well, which will allow for accelerated reequipment for the Russian economy and science. As you know, our budget is an ample one. Development of our economy must take priority over the present fiscal questions.

Dear colleagues!

Work on the national projects that we started two years ago cannot be restricted to the above measures. I repeat, it is necessary to continue modernizing the system of public health care, education, and housing. Here again I expect constructive cooperation from all branches of authority.

The planned federal budget for 2006 has already been brought to the Duma. I address parliamentary deputies and Cabinet members. It is important to retain the good tempo of budgetary proceedings. During subsequent work, I ask that we focus on the said priorities. To this avail, a council for the implementation of priority national projects will be created, and I will personally supervise its work. Representatives from all levels of authority, the local representatives , and basic political forces can participate in the council. Experts and business community representatives must take part in the council's work. I will ask the Presidential Executive Office to prepare the corresponding proposals.

In sum, I would like to emphasise that focusing budgetary and administrative resources on improving Russian citizens' quality of life is both necessary and logical for the economic development that has already taken place, and that will continue in the future. It has already taken place within the last five years and will continue in the future. It is a guarantee against disinvestment, and against spending money without receiving noticeable feedback. During one of these meetings, I already spoke about how we must avoid budgetary disinvestment. But this is targeted at investment in the person, and therefore, in Russia's future. Of this, I am absolutely convinced.

Return to the Current Articles page