Prime Minister Vladimir Putin delivered his annual report to the State Duma yesterday. He spoke for 1.5 hours, and spent just about as much time replying to the deputies' questions. KP is quoting an abridged version of his address.
"Nothing of the kind has happened since world war II"
I'm sure you remember how 2009 started. They were the most critical months of the recession. Nothing of the kind had happened since WWII.
We haven't dealt with all the troubles yet. Nevertheless, the gloomy forecasts didn't prove correct, and this cannot be explained purely by good luck.
I want to stress how important it is to us... to pursue a prudent financial and economic policy, not to go with hat in hand, losing economic and, consequently, political sovereignty.
"Oligarchs' fortunes have dwindled considerably"
The average income increased by 2.3% in 2009. This mainly reflects public sector employees and retirees, rather than business oligarchs whose fortunes have dwindled considerably over the same period.
We took preventive actions to avert critical unemployment growth... In February 2009, unemployment hit an all-time high of 7 million in the crisis, declining to 6.4 million in March 2010.
We have promised to review another increase in public sector employee salaries – in military pay and pensions and in college scholarships. We'll do so next autumn after reviewing the federal budget.
"We will live longer"
The average life expectancy has reached 69. I'd like to remind you that the average life expectancy was 64.5 in 1995. Although this change is not very impressive, it's nonetheless quite noticeable.
During the second stage, scheduled to last until 2015, we must promote sustained national population growth and increase the average life expectancy to 71.
Retirement benefits were indexed four times in 2009... The average annual effective growth was 10.7%. The year's end will see a 45% rise, starting in April. The average size of the monthly labour pension is presently 8,100 roubles, while the total benefits payable to WWII veterans have grown to 23,000 roubles.
"We reacted to the crisis as a strong state"
Over three trillion roubles were budgeted for the anti-crisis programme... At the current exchange rate, this amounts to over $100 billion... The majority of the adopted measures have proved effective... Russia reacted to the crisis as a strong state that does not wait for everything to change by itself, but acts with resolve...
"I was surprised to see these numbers myself"
Budget slashing means cuts in government spending on every budget item... We chose a different solution, and I believe we did the right thing.
As a matter of fact, we kept the budget at the planned level, redistributing budget spending to benefit the sectors that can ensure social stability.
Moreover, budget spending grew significantly in 2009 compared to the 2008 pre-crisis year. I was surprised to see these numbers myself yesterday. Budget spending grew 27.3%, whereas revenues dropped 20.9%. We used the accumulated reserves to offset the deficit.
"After the fighter plane, we will make a bomber"
The production of military equipment grew nearly 13% in 2009 despite a general decrease. Production in shipbuilding increased 31.6%, 16.5% in the missile and space sector and 9% in aviation.
The trials of the fifth-generation fighter plane are proceeding well... After ending work on the fighter plane, we'll start a project to create a new strategic bomber.
Roads
This year, we will finish the construction of the Chita-Khabarovsk route and be able to open it to traffic from Russia's western borders to Vladivostok on the Pacific Coast. I'm confident that this new highway will greatly benefit the country and will remain in use for a long time just like the Trans-Siberian Railway.
The Trans-Siberian Railway was built in the Tsarist period in 1903-1904, and the region had no other comparable route...
"Government has earned additional money"
We launched our anti-recessionary programme in the financial sector first in 2008. As we all know, our measures were disputed and doubted by many... Let's see... First of all, nothing was given away for free. The funds were distributed as loans, and loans must be paid back... These funds have already been returned to the state. This allowed the government to earn an additional 19.2 billion roubles in revenues...
The Central Bank's refinancing has reached a historic low, 8.2%, which is unprecedented in Russia's modern history...
Fund for non-working pensioners
I suggest we consider setting up an additional fund within the system... It would be designed for non-working retirees. The government would distribute 1,000 roubles each year to senior citizens' accounts, who would be able to use the funds as a co-payment for health insurance. And if a person didn't consult a doctor over that yearlong period, the money would accumulate in his or her pension account.
On reforming the state administration
Our task is to reform the budget and to overhaul state finances and administration between 2011 and late-2012. These reforms will not merely shuffle spending around, transferring money from one budget item to another. Rather, our task is to change the way we spend.
Housing option for maternity capital
We receive many proposals on expanding the options for using the maternity capital... I'll tell you what the thinking was when we restricted the usages... We tried to protect the interests of mothers in this way, to prevent the money from being wasted... One proposal is to spend the maternity capital's benefits to buy a vehicle. But who would end up driving the car? No one can say.
Yet, some options for spending the benefits can be expanded – for example, the housing option...
On housing
I can tell you now that in the run-up to the upcoming celebrations of the 65th anniversary of the end of the Great Patriotic War, we have already provided housing to all the veterans who were registered for these benefits before March 1, 2005. All in all, 28,000 veterans have moved into new flats... In 2009, Defence Ministry service members received 45,600 new flats. This has never been done before. Another 51,900 flats will be provided this year. All together, almost 100,000 flats were granted over two years. As a result, we will fully meet the permanent housing needs of service members in the armed forces, as we promised.
On private business
It's still premature to speak about full entrepreneurial freedom in the country... We have now reduced the number of licensed activities to 74 and the percentage of goods requiring certification to about 50%, but even this isn't enough. In the European Union, for example, a mere 15% of commodities have to be certified... It takes up to two years to receive an approval for major construction projects, whereas in Europe it takes between three to six months...
"But I believe it simply cannot get any worse"
If you dig deeper into the problem, it becomes obvious that it isn't limited to the number of inspections... Two awful tragedies of the past year – the accident at the Sayano-Shushenskaya hydro-power plant and the fire in Perm – revealed serious problems in the system of government regulation and inspection. Everything had been checked and checked. The paperwork was good, everything was in order, but tragedies occurred. This shows that inspection agencies are overloaded with paperwork and the institution of government oversight has been devalued. Quite often, these agencies find fault with companies for minor issues or for nothing at all, while no one sees the real problems.
Under these circumstances, businesspeople often prefer to strike informal deals with inspectors...
Businesspeople pay 10 billion a year for official sanitary documents. Sometimes, this borders on mocking and harassment, when a farmer must collect several kilograms of paperwork to sell one kilogram of meat...
Many people worry that if we cancel this or that procedure, the situation could get worse. But I believe it simply cannot get any worse because we have already hit rock-bottom. You remember how the sports facilities collapsed in Moscow. Everything was fine, all the certificates were in order and all the paperwork had been collected. But the roof collapsed.
Prime minister's forecast
According to official government forecasts, the GDP is slated to increase 3.1% in 2010. Nevertheless, there is a high probability that the growth rate will be higher.
The preliminary results of the first quarter of 2010 inspire optimism. Growth in industrial production was 5.8% and real income grew 7.4%. All of this enables us to say the recession is over in our economy... Russia has... the lowest inflation in 18 years – 8.8%... We need to bolster this trend and reach the level of 5% to 6%.