Government to continue railway reform and assess regional issues
By Aleksey Ilyin
At yesterday's meeting, the government discussed railway reform, regional development issues, and some international cooperation issues.
At the beginning of the meeting, Prime Minister Vladimir Putin made a statement that will make the country's pensioners happy. The government has prepared a draft law, which will increase the base labour pension rate to 1,950 roubles per month beginning March 1, 2009. Starting December 1, the base labour pensions will increase to 2,460 roubles per month. As a result, by the end of the year, the average social pension should not be lower than the pensioner's subsistence level. "This task was set long ago, and we will accomplish it on scheduled terms," the prime minister said. In addition, the insurance based portion of the labour pension will also be increased (by 15.6 percent starting 1 April).
Putin then proceeded to discuss railway issues. The prime minister reminded attendees that railway reform had been ongoing since 2001 and was divided into three stages. During the first two stages, OAO Russian Railways (RZhD) was created, and independent freight operators were authorised. The main objective during the third stage of reform was to develop a competitive railway transportation market. "The idea is to finally divide state management from the business operations of the rail system; to improve the tariff regulation system and to create passenger commuter companies," Putin said. Also, a Federal Rail Passenger Company will be created to provide long-distance passenger service.
Putin stressed that railway reforms were gradual from the beginning and that the decisions were made only after thorough consideration of all possible alternatives. "The quality, not the pace, of the reforms has been paramount for us, the prime minister said, - this approach should continue."
An RZhD investment program is being prepared during a difficult period of reduced freight traffic mainly due to the global financial crisis. "Nevertheless, we need to maintain the basic principles of the investment plan as originally conceived." Putin said.
From railway issues, the premier moved on to discuss regional issues. According to Putin, the government will need to objectively assess regional issues, help regional governments identify problem areas, and recommend solutions. The government will evaluate the state of the affairs in the regions against critical public needs: income growth, education and healthcare, and the investment climate.
While many regions have been implementing government recommended reforms, others have not. Putin said that in 2007, only seven regions fully implemented insurance based medical care, and only 26 regions completed transition to a per capita school financing system.
The prime minister was especially unhappy about the numerous obstacles to starting a construction project. "It takes half a year to obtain a construction permit, Putin said, and in ten regions the time required for the process has even increased." In the Stavropol territory, for example, the approval process to begin construction takes seven months; in the Vladimir region - 10 months; and in the Saratov region - a year. The same bureaucratic red tape exists for oil industry start-ups. "I had a meeting recently with oil industry representatives," said the prime minister. "Even after receiving a permit, they still have to wait two years."
Putin was also displeased with the ineffective spending of regional budgetary resources. He said, "According to our calculations, 440 billion roubles from various regional budgets was spent ineffectively in 2007.This is about 10 percent of their total expenditure. Were regional reforms more actively implemented, these resources could have been spent on salary increasing for public sector employees and investments," Putin said.
Still, the government is not going to dictate to the regions how to fulfill their own obligations. "According to the Constitution and the law, this falls within their jurisdiction," Putin said. At the same time, he indicated that the federal government had a right to incentivise financial assistance based on a regional governments' effectiveness level. The head of the cabinet said that starting this year, the 20 most successful regions will receive a total of 2 billion roubles from the federal budget as an "incentive bonus."
Also considered at yesterday's meeting were international issues. Specifically, the customs union of Russia, Belarus, and Kazakhstan was discussed. According to the prime minister, the project was gradually "becoming a reality." It will become the first step toward the formation of a single customs territory unifying the three countries.