Prime Minister Vladimir Putin talked with miners during his visit to the Polosukhinskaya Mine in Novokuznetsk
Prime Minister Vladimir Putin talked with miners during his visit to the Polosukhinskaya Mine in Novokuznetsk
Transcript of the meeting:
Vladimir Putin: Good afternoon.
Today we will hold a meeting on the problems of regional development, look with consideration at the state of affairs in the region's economy and employment market, and see how metallurgists and miners are working. I believe it will be interesting for you to learn what we will do and how we will do it, and hear about the economic situation in the country.
I would like to begin today's meeting with the regional leadership and the heads of other regions of the federal district here, at the mine, and to hear your opinion on current events. Everyone wants to know what is happening in the global and Russian economies, and to learn about their prospects. I will speak on this issue before we begin our meeting.
You all watch TV and read the newspapers and certainly know that very difficult processes are under way. I have just spoken with one of the shareholders, the mine's owner, and know that you export 65% of your industrial output. This means that our economy has become part of the global economy, as I have pointed out on more than one occasion. And so, our economy depends on events in the global economy. Of course, if a mine exports 65% of its output, it is dependent on the buyer.
A market economy has its advantages and also quite a few disadvantages. The latter include periodic crises in different sectors of the global economy. As a rule, they are connected with overproduction. Producers manufacture certain goods - clothing, footwear, housing, automobiles - but nobody calculates the size of the demand. They make rough calculations for each sector, but nobody can give the precise overall figure. So when some sector starts overproducing, they have a crisis on their hands. It happens differently in various sectors and in different periods.
The specific feature of the current situation is that there are many crisis elements in the global economy, and they have all met at the same spot. I said at an international economic forum in Switzerland that it reminds me of an ideal storm, when all the waves converge at the same point at the same time. This is what is happening in the global economy, and this certainly affects the Russian economy.
The second element is that this crisis originated in industrialised countries and developed markets, in the heart of the global economy, the United States, and has spread to the European countries, which are the main consumers of our goods. This is the second crucial element, and this is what has made the crisis into a global event.
The third element that interests everyone most of all are the questions on what is the depth of this crisis and where is its end. Unfortunately, nobody can answer this question right now, although it is the most important one.
The situation is alarming because the forecasts for the leading global economies, including the United States and Europe, show that the crisis will continue to develop in 2009, thereby limiting the demand for the products we produce.
This makes us wonder what we should do and what move we can possibly make. Our actions seem to be better than what the other countries are doing in terms of their social consequences. In the current situation, which is the same in all countries across the world, the main objective of the state is to ensure the implementation of its social commitments.
I am referring to the payment of pensions and wages in the public sector - I will address the situation in other sectors later - and allowances, as well as assistance to economic growth and an increase in the consumer demand and the demand in the industries.
Unlike any other country, Russia has not curtailed its social commitments, but is rather expanding them. In general, I think our anti-crisis package is larger than in any other country. Of all the industrialised countries, Japan is investing the most in its anti-crisis actions, approximately 2% of its GDP. The Russian Government has approved measures worth some 4.5% of its GDP. Taken together with the efforts of the Central Bank, which is trying to maintain liquidity in the banking sector, the anti-crisis package amounts to nearly 12% of GDP. No other country is doing this.
These are social commitments. I have said that we are not cutting back on allocations, pensions and the like, but are going ahead and implementing all of the approved programmes. We have not curtailed any of the approved programmes; what's more, we have even increased them.
Second, assistance to the economic sectors. We have not come up with anything unusual in this sphere; we are doing the same other countries are doing. To begin with, we are reducing the tax burden on the economy. We have cut the profit and small business tax and have taken several other measures. Company directors know that they imply an increase of bonuses depreciation, etc., to 30%. This keeps the money in the economy, allowing enterprises to survive and develop. We are cutting the customs port duties, which our partners have shown criticism towards. We are raising customs import duties on the goods that are also produced here to ensure their sale on the domestic market. This may be considered good or bad, but we are doing this for the national producer.
A measure that has both positive and negative aspects is the exchange rate of the national currency. When the dollar became expensive, many real economy enterprises started feeling better than they did before; however, this has cost us. We [depreciated the rouble] smoothly, in stages, so that many people had enough time for speculative operations; this has deprived us of part of our gold and currency reserves. But I repeat, we did this deliberately, so that everyone involved, above all, the ordinary people, could make a stand and, if they wanted, exchange their money.
While seeking to prop up the real economy sector, the government is also subsidising interest rate on loans and will continue doing so. Unfortunately, loan interest is rather high in Russia, which is problematic. We will not easily resolve this issue because we cannot lower and keep the refinance rate of the Central Bank, and hence commercial banks, below the inflation rate. If inflation is 13%, the bank rate cannot be lower for a long period of time. This would amount to a collapse of the banking system.
What can we do with regard to this, and what are we now doing? We are subsidising the interest rate for some economic sectors. You are not directly benefitting from this, although I know that your region has agriculture projects. We are currently subsidising 80% of interest loans of agribusinesses, which is indeed a substantial support. It has also been planned to issue state guarantees to strategic companies that take out loans. We have compiled a list of several hundred companies, including metals and mining ones. I am told there are many mines and metal companies on that list. We will support them and will issue them state guarantees when and if necessary. We have approved budgetary allocations of 300 billion roubles for this purpose.
I want to remind you that state guarantees are not a piece of paper but ready money, and its amount cannot be unlimited. It should be taken into account in the country's budget, or else it will not be guarantees but empty words. And when we include such spending in the budget, we take the same amount from circulation. We will work toward this goal.
Another objective is to support the domestic demand and producers. I have already mentioned tax, tariff, customs and other measures, and assistance to the people. They may not seem large at first glance, but still. We have taken the decision for some economic sectors, in particular the automotive industry - you have probably heard about it - to subsidise two-thirds of the Central Bank's refinance rate for those who buy cars costing up to 350,000 roubles. This decision applies not only to Lada, VAZ or GAZ cars, but also to a considerable number of foreign automobiles made in Russia. It applies to some Japanese producers, for example Toyota, European makers and the U.S. company Ford. Many of such companies that produce their goods in Russia fit in this price bracket.
As for housing, we have decided to exclude some payments from the property contribution. People or families investing 2 million roubles in housing will not pay taxes for this sum, which should support the housing demand, although people are waiting for housing prices to fall. Unfortunately, developers and construction companies are still keeping up prices of the facilities built before the crisis. We can discuss this issue in more detail.
And lastly, one of the main objectives, and a direct responsibility of the state, is to maintain stability on the labour market, directly helping those who have lost their jobs. You have certainly heard about it - we have considerably increased the unemployment benefit, to 4,900 roubles. However, as the Governor has said, this has created a situation where people in the regions whose salaries are small prefer to quit and live on unemployment benefits. But this is a forced decision. We know that the number of those temporarily unemployed may increase, and therefore we have increased allocations [for unemployment benefits] to 34 billion roubles.
Next, we have agreed with the governors and other regional leaders that each member of the Federation will set up headquarters that will address employment issues. There can be several ways to do this. Each region will draft its own plan. We have stipulated a substantial sum in the federal budget, 43 billion roubles, for this purpose. Such anti-crisis plans have been drafted in 78 federal regions, including here in Kemerovo. You have a good plan.
These plans imply several measures, such as retraining of professionals and creation of temporary jobs, the so-called social jobs. These cannot become permanent jobs, but it will allow the people to earn some money for the family.
These are the provisional measures we will use to emerge from the current situation with minimal losses. I think our country has the ability to do this, to overcome the crisis with minimal losses. I am referring to the background we have developed over the previous years.
As I have said before, we will not reduce the planned social and investment expenditures. The state's investment expenditure is also a trigger for restarting the development of whole economic sectors. When railways plan to build something - your region has such projects, namely, the construction of a railway from Novokuznetsk to the Far East - they will order metal. And if they order metal, steel producers will need coking coal. This creates a whole production chain. This is why we are not reducing investment spending. Moreover, it has increased a little compared to the past year, to 1.2 trillion roubles. This is a large sum. Let me repeat, this is even a little more than we spent last year but a little less than we planned for this year. However, overall budget spending will not decrease but will grow in 2009, which I believe is correct in the current situation.
That is everything, generally speaking.
You must have questions, or thoughts and observations. Please feel free to voice them.
Oleg Kolesnichenko: My name is Oleg Kolesnichenko and I am from Novokuznetsk. Will miners ever have a decent pension?
Vladimir Putin: I know, I know. The Governor and I discussed this subject on the way here. It is one of the most high-priority themes among miners. True, in Soviet times, the pension was 70% of the wage. But today the so-called income substitution ratio in Russia is on the whole lower than the European standard.
We should, of course, thoroughly analyse the issue, decide how to calculate the pension, but generally the goal is to increase the substitution ratio, or the money a person receives upon retirement, as a pension is calculated as a percentage of his or her average wage.
It is unlikely to do this exclusively for miners today, because other people working in hard conditions - chemical industry workers, metal workers and people from some other occupations - will approach us at once and raise the same issue.
What is the way out? It lies in improving the pension system, including increasing its accumulation part. I do not know whether or not you have heard about it, but we have decided that the state will add one rouble to each rouble a person contributes to his accumulation portion. We think this will be an incentive for increasing the accumulation part. Here the main thing is to preserve available jobs and increase wages so that a person is able and wants to increase his contribution.
In fact, I spoke of the state's social obligations: We will spend the largest sum this year on the pension system. Since we do not reduce state expenditure, and revenues of the state budget will be substantially lower, our budget will have a deficit. In other words, the state will spend more this year than it will earn.
What other countries do in these conditions? They approach international financial organisations and ask for loan facilities. The eight trillion roubles we have accumulated over the previous years will enable us not to seek outside financing. We will cover our budget deficit (which we expect in the neighbourhood of 8%) out of the receipts obtained in the previous years, from the Reserve Fund. This year, we will spend about three trillion roubles from the reserve funds. A considerable part of this money will be used to maintain the pension system.
We planned to index pensions on three occasions this year. Seeing that inflation could be higher than planned, we will index pensions four times. Towards the end of this year, by December 1, we must increase pensions by about 30% so that the social pension would be no lower than the pensioner's living standard.
We will also continue our programme of support for accumulative part of pensions, and have the necessary funds budgeted for these purposes.
Vladimir Melnik: Mr Putin, Kuzbass is geographically located in the middle of Russia, with sea ports 4,000 kilometers either east or west ...
Vladimir Putin: Shall we move the capital here?
Vladimir Melnik: No, that is not the point. We mine coal. I work at the Kotinskaya mine as a leader of a face team. Coal, to be sold, must be brought to a port. Current railway tariffs are very high. Could the Government lower them?
Vladimir Putin: Mr Melnik, you need not complain. This is an issue that miners have been raising constantly and have been right. Previously, it was planned to raise railway tariffs by 14% or so at the request of railwaymen. This year we decided not to raise them by more than 5%.
What does this mean for Russian Railways (RZD)? It means a considerable shortfall in revenues, which they expected this year. And it concerns not only the wages of railway workers, although their wages, unlike wages in practically all sectors of the Russian economy, grow in line with labour productivity. This must be practiced in other sectors, too, but so far we have had no results. In other sectors, wages grow faster than labour productivity, but on railways they correspond to labour productivity growth. As a result, Russian Railways have a considerable revenue shortfall, and we, not to undermine their investment plans (metal workers and miners are also interested in their implementation because these are links of the same chain leading to a final product), have budgeted 50 billion roubles to cover RZD losses this year.
I repeat we are taking this money from our reserves. In these conditions I consider it unwise and even dangerous to lower the tariffs further, because they may hit back at you.
Vladimir Melnik: Now about equipment. We operate new, entirely new equipment, bought in Germany. But import duties...
Vladimir Putin: I agree they should be eased.
Vladimir Melnik: Such equipment is not manufactured in Russia.
Vladimir Putin: You are absolutely right here. Such a task has already been put before the Ministry of Economic Development. We have greatly reduced or abolished altogether import custom duties on equipment which is not produced in Russia. If the miners are lacking something, we must look into the matter and do something about it. I will look into your case, I promise.
V.G. Sannikov: I represent the Abashevskaya Mine and am chairman of a trade union organisation. Our mine is 65 years old, and I have spent almost 40 years working at it. I also want to raise the issue of miner's pensions.
I am sure you have noticed that there are a lot of people of an advanced age in the crowd around you. There are not many young people among us. I am concerned about the training of young personnel and the upbringing of the rising generation. Young workers are now finding it very difficult to get a job at a mine, or at any coal enterprise. We have a vocational technical school where people learn their trades, but practical training is hard to organise because of the crisis. As analysts and scientists say the crisis has not yet reached its peak. When will this happen? At first, we felt it did not concern us, we were all nodding at the West: They are having a crisis, but we are not. Now that the crisis has hit us, we saw what it was and felt its effect.
You said the pension issue would be examined. If the Government decides and the pension is made to be decent, some of this audience will retire to a well-earned rest. Now they have to work to live from hand to mouth, and continue feeding their families. How will you comment on rising prices for food and consumer goods?
And another thing. If gas workers depend, for example, on nobody else, they have the South Stream project going on. Right?
Vladimir Putin: There are both the Nord Stream and the South Stream.
V.G. Sannikov: The amount involved is 1 billion cubic metres. They will be getting good wages and nothing will hold them back. But we depend on metal workers in a way. If the metal industry consumes coal, we will produce coal and make money. People are eager to work. After all, the social and everyday conditions of our working people depend on this.
Vladimir Putin: Your main point was about personnel training, but there were some aspects which I would not like to pass by - they are very important, too.
The first is growing prices, above all for foodstuffs. This is because, unfortunately, we import considerable amounts of food, which is strange for us. With the rouble rate changing, imports have gone up in price. I have already said that a weaker rouble has its good and bad points. For real production, it is a good point, especially for one that is focused on exports. Mines and metal plants that export most of their output only benefit from that.
Some of the metal works here export 50% of their production, while the mine we are staying now at exports 65% of its product. A change in the rate of our national currency only benefits such enterprises, it improves their financial situation because their main spending is in roubles. You sell your product for currency, the currency arrives, you exchange it into roubles, which make a higher sum, and you can pay wages, buy components or equipment, and so on. The finances of the enterprise change for the better at once. But for those who import goods, and that includes food, such a situation spells losses, because they pay more and therefore invest more in the price of a commodity, and that is a bad point.
What is the way out? It suggests itself - we must develop our own agriculture. This is why we are now investing most money, even in these crisis conditions, in farming, of all sectors of the economy. To begin with, we subsidise up to 80% of the interest rate for farms to implement their investment plans, which are very large-scale. We now see large firms and big livestock breeding centres springing up. There is nothing in Europe to compare with them: they are larger, more modern, well-equipped and computerised throughout. And we seek to help the farms realise all these plans.
We have provided more capital for Rosselkhozbank, which grants loans to farmers. Last year it issued 30 million or 25 billion roubles, and 45 billion this year. This is direct state money given to Rosselkhozbank.
We also support other banks that work with agriculture, including through the Central Bank. In general, there is every reason to believe that our agriculture will develop as successfully as in the previous years. This means that in the ultimate analysis these efforts will translate into consumer prices and consumers benefits. But the situation is what it is, and I am being straight and honest with you in describing what is happening. One might say that not everything has been done yet, there are things that still need to be addressed, and some things we expect to do. But this is what is taking place in reality and I think we are on the right road.
As regards personnel training, it is one of the key aspects of development in any branch of the economy. Unfortunately, the system of vocational schools set up in the Soviet Union has to some extent gone to seed over the past decades. Currently, attempts are being made to restore it, but this cannot be done without the participation of the industry.
I have recently visited the Moscow Region. Its leading enterprises have direct ties with vocational schools. However difficult it is, they invite young people for production practice. They do not, of course, pay them a full wage, but for students from technical schools even a small amount of money is good. Staff turnover is essential for them. They also have an excellent system of working with young people drafted into the armed forces, who they take back later, after their service in the army.
Nothing prevents you from organising work along these lines here - with support from the regional administration and together with plant management. It would be a fine thing if the plants joined in the effort.
What worries me very much about the age group you mentioned is drug addiction. For this region, the Kuzbass, this unfortunately is a very urgent issue. Drug addiction here, especially among young people, is higher than the average figure for the country, much higher. We must pool our efforts here: the law enforcement, administration, public organisations and health authorities must work out an effective plan of joint action.
Voice: Before we know it there will be no one to serve in the army.
Vladimir Putin: Yes, especially since we have cut the term of army service to 12 months. You have touched a sore spot there. The equipment in the Armed Forces is becoming more and more sophisticated, we need trained specialists, and you cannot become a specialist in two or three months. That is why a large part of the Armed Forces will be manned by contractors, and they want decent salaries and permanent housing. These are costly things and there are many problems there. So, in terms of personnel training for your sphere and training of the workforce for the country as a whole, it is an important problem.
I have recently visited an employment centre. And it is true that people are being laid off. There are almost as many of them as other enterprises are ready to hire. But we need skilled workers, for example, welders, and you cannot train a welder in one day.
Nikolai Syrov: I am a team leader at the Raspadskaya coal pit. My name is Nikolai Syrov. It's nice to be able to talk to you. I would like to discuss the situation at my coal mine. It is the same as in many other pits, especially those which produce coking coal.
Vladimir Putin: But your situation is somewhat better.
Nikolai Syrov: I wouldn't say it is all that good. Coal output has dropped by almost three times and that triggered a chain reaction: wages have dropped 40% and we've been put on a short week.
Vladimir Putin: Is it four days?
Nikolai Syrov: Yes. And that is where the troubles begin. We are 7% in arrears on our financial contributions to the budget. We have bought new equipment and revamped all the coalfaces. All the modern machinery is standing idle while we are moving the coalface to avoid any crashes or fires. It's distressing that the most profitable coal pit in the country is already operating at a loss. We have committed all the reserves and yet the biggest coalmine in the country is down on its knees. This is the situation as things stand. We need Government help.
Vladimir Putin: Solvency and demand are key issues. You were largely working for export, and we cannot force Western consumers to buy your products.
Look what happened: it's a chain reaction. We have already talked about it. Your consumer is the metallurgical industry. The metallurgists depend on those who buy metals. Who are they? One of the biggest consumers is the automobile industry. In Europe metal sales have dropped by 25-30%, in the US, by 40% and in Japan, by 40%. Metal consumption in the world has dropped sharply. I am not talking about other sectors, which also cut their metal consumption. So, metallurgists do not buy coking coal. Buying all the metal for the state reserve (as has been suggested) is not an option. First, it is impossible to buy all the metal on behalf of the whole world, on behalf of all the consumers in Europe, America and Asia. That is simply impossible. That way we would have to stop paying pensions and public sector wages. And secondly, we would not know what to do with all the metal. Obviously, that is impossible.
Therefore what needs to be done is to restore solvent demand in the world market.
Voice: What is the way out? We should start building merchant ships, planes and tanks for the army.
Vladimir Putin: You are quite right. That is why we are trying to maintain and even in some cases restore demand within the country. But I have to tell you right off that it won't cover everything that you used to sell. Anyway, we have to wait until the world economy recovers. But something can be done inside the country, even if only partially. We are trying to do it. The speaker was right. We have turned our attention to civilian ship building. I recently chaired a meeting on that subject in St Petersburg, and we discussed the ship-building industry as a whole. What can be done? What can the Government do? Increase the state order for metal-consuming products. We have done it. We have increased budget allocations to enable the army to buy more, the Ministry for Emergencies to buy more, we gave Russian Railways 50 billion to enable them to implement its ambitious programmes, and so on and so forth. Aircraft building will also get the necessary funding.
The Government's investment programme is quite ambitious. Much of the metallurgical industry output is consumed by builders. I was sitting at the meeting in St Petersburg and running over the projects in my head that we will invest in this year. 606 billion will go into various construction activities, including the projects in Sochi, and that too, odd though it may sound, is an anti-crisis measure today because it helps us keep up the scale of construction work. It gives work to almost 50,000 builders, plus related industries. That makes more than 100,000 jobs. Add to that building materials and metals.
We are also preparing an event in the Far East, APEC. We have to provide all the veterans with housing this year. We are going to invest in new accommodation for the people living in decrepit and unsafe housing; I am sure some of you here have faced this problem. We are going to invest 90 billion out of the Housing and Utilities Fund specially created for the purpose. All in all, the bill runs to 606 billion roubles, plus 243 billion for road repair and maintenance. It adds up to over 800 billion, and all the rest will go into high-tech spheres.
We are putting in 500-600 billion through the banking sphere. We will finance all that can be done inside the country, meeting our social obligations to pay pensions and benefits. There is an idea, I will tell you about, it is simple, you don't need any special training. Some members of the Government say: We still have reserves, we use only part of the reserves to cover the federal budget deficit; the reserves will last us through the next year and the next, so let us pour everything there. First, we may be left without reserves, which is dangerous. It's like the family budget - if you spend more than you earn, you have to go cap in hand. So, we have to tread carefully.
That is one point. Another point is equally important. Inflation runs at 13% already. It's a fairly high rate. Inflation means growing prices. If inflation grows it immediately affects the prices of drugs, food, etc. Inflation depends, among other things, on the money supply in the economy. The more money, the higher the prices unless we produce more goods, and we cannot dramatically increase the production of goods because labour productivity is still rather low. To boost it, we need years and billions of roubles and dollars because we have to import equipment. Just like with you, new equipment is imported, but you cannot import all of it at once. It takes time. You cannot do it overnight, or even over a year. That is why the amount of money we inject must be measured and well considered. I think we are about to take optimal decisions within the country in terms of the amount of money we will spend on various things, on direct government investment programmes and on social needs.
We should pool our efforts with our partners - perhaps I am going to say something I have never said before, but it is also important - we should work together to rescue the world economy from its crisis. We are very active in this field. I am constantly in touch with the heads of government and President Medvedev is in constant touch with the presidents. He will be going to London soon for a major conference of the 20 leading countries. Joint efforts are needed.
A.Lyane (cutting machine team leader, Unit 2, Abashevskaya Coal Mine subsidiary): May I ask a question?
Vladimir Putin: Yes, of course.
Oh, I am sorry. I forgot to say something when answering the previous question. You have mentioned gas workers and said that they had no problems. Well, they are also laying off people. Sales have dropped. Some of our partners do not act like the miners, for example. The miners just sell whatever they can in the market. They work under long-term contracts. They use the "take or pay" formula. That is, if you have a gas contract you have to collect what you must collect under the contract, if you do not collect, you have to pay all the same, and if you do not pay you will be fined. Ukraine is not taking the amount it contracted for and it should be paying a fine. We forgive them these fines because we know the reality on the ground, they have no money - they are on the brink of bankruptcy, and you understand that you do not finish off your partner because then he would be totally incapacitated. Just yesterday Alexei Miller, head of Gazprom, reported to me that they are cutting production because European consumers are cutting gas consumption. Consumption is falling in our country and in the European consumer countries. The cuts are massive, which is also a bad sign because it means that the economies are contracting.
A.Lyane: This is my question. In my region electricity and everything else relies on our coal, and coal prices are falling by several times. Why are electricity rates rising in our region?
Vladimir Putin: Good question. You know, it is like in some other sectors, when incomes and sales fall, those who produce a certain product seek to make up for their losses by raising prices at the expense of the consumer. That, too, has its limits and I think those who do it thoughtlessly will eventually face problems, because all the sectors are interdependent.
Not so long ago oil prices soared to astronomical heights, $140-150 per barrel, but eventually it hit industries, machine-building, and it collapsed. That is also one of the causes of the crisis. The same is true of electricity prices. Why did oil prices fall in the world markets but hardly at all inside the country, out of sync with the world prices? Because our oil companies thought they could compensate in the domestic market for the losses they suffered in the world markets. We have cut taxes for the oil and gas industry and the oilmen were able to keep more of the earnings, and export became more profitable. Because export became more profitable they logically asked themselves, why sell inside the country? Let us export everything or raise domestic prices. But we are not cutting taxes and export duties for that purpose. The same apparently is happening to the power industry. We should take a close look into this matter.
Vladimir Sbitnev: The city of Novokuznetsk, Polosukhinskaya coalmine, Unit 1, my name is Vladimir Sbitnev. Thank you very much for coming to our region. I have a question: Unit 1 at the Polosukhinskaya mine uses domestically produced equipment, unlike many other mines. It is made in Russia, moreover, in Kuzbass region. Our manager deals not only with the coal industry, but also with land farming. Food is supplied to the mine and miners can receive part of their wages in kind if they so wish. Such enterprises as ours could be given tax breaks so as to encourage others to follow our example in order not to import goods but produce our own.
Vladimir Putin: That is exactly what we are trying to do. We have in a two-pronged policy: there is equipment produced in Russia, and equipment produced by foreign investors in Russia, the so-called residents. We try to cut their taxes, including the profit tax. As I said, we have cut them quite substantially.
At the same time we have fairly high import customs duties for some of the equipment that is produced in Russia. We thus ensure preferential treatment of the domestic producers.
However, we reduce or even introduce zero import duties on the types of equipment that are not manufactured in Russia so that enterprises, including your enterprise, could modernise. You have said that you buy domestically produced machinery, and that is true up to a point. I even asked if the miners used Russian-made washing machines. But you use imported technological equipment. One has to proceed very carefully in order to enable the enterprises to modernise. That is how we proceed.
Yevgeny Denk: One more question. My name is Yevgeny Denk and I work at the Antonovskaya mine. I live in a decrepit building. I would like to invite you to my home to see how miners live.
Vladimir Putin: As for decrepit housing, we discussed it with the Governor just now. We initiated a programme to move people out of decrepit housing several years ago, and at the time I felt very proud to report that we were allocating 1 billion roubles nationwide for that purpose. At the time the Kemerovo Region got 74 million. This year we have allocated 90 billion roubles for the purpose. The Kemerovo Region will get 4.5 billion. That is a large amount. I don't know how many people have moved out of dilapidated housing, but certainly many more than in other regions.
This year 600 barracks will be pulled down. That is a big step forward. When I said that we are keeping up the level of government investment, including in the building industry, these numbers also included the Housing and Utilities Reform Fund money, most of which goes into moving people out of decrepit housing. This year 90 billion will be spent. Let us go and have a look now. And we shall also look at the new housing. I hope the barracks where Yevgeny lives will also be pulled down and he will move to a new home.
Aman Tuleyev: The whole neighbourhood will be pulled down. It won't be the case that one barrack is pulled down and the one next door remains. We have decided to spend all the money to demolish the whole residential area.
Vladimir Putin: That's right. It will be more convenient to redevelop the area, and all the residents should be given new housing at once.
Aman Tuleyev: We are going to move all the residents to new housing at once.
Vladimir Putin: We will now have a look at where you live and at your future homes.
In conclusion I would like to thank you for this conversation. Although the situation is not simple, our talk has been constructive and businesslike. We will take note of some of the things your colleagues said. We shall see and come back to it and decide what else needs to be done.
And one last thing. I think all of us in our respective places - those who work in the Government and those who work in the regional administration, the heads and owners of enterprises and those who work in their workplaces - must be responsible about doing their jobs. Efficiency and character have always been highly prized in Russia. These commodities are in high demand today. I wish you success. Thank you.
Vladimir Melnik: One more question. How do you see the future of the coal industry? What is your opinion?
Vladimir Putin: The coal industry is being modernised in a very substantial way. I am sure it will be needed, especially in innovative fields. This coalmine has indeed done a lot in terms of protecting the environment: You have dust catchers and coal storage facilities and you treat coal. All this helps to develop production.
Many of you spoke about wage cuts and layoffs. None of these things are happening at this coalmine, no wage cuts, no job cuts. How is that achieved? It is achieved because the owners and the managers of the enterprise modernised part of their production in due time. It made your output more competitive and enabled you to stay afloat. Those who act in this way will help the coal industry not only to survive, but to develop. I have no doubt about it. And given new technology, this is a feasible task.
Thank you very much. Goodbye.