Agenda: On the draft programme for the privatisation of state property, action plans of federal executive bodies and 7 more questions.
Transcript:
Government meeting
Government meeting
Government meeting
Minister of Economic Development Alexei Ulyukayev reports at the Government meeting
Minister of Transport Maxim Sokolov and Minister of Agriculture Nikolai Fyodorov
Minister of Labour and Social Security Maxim Topilin and Minister of Regional Development Igor Slunyayev
At the Government meeting
Minister of Economic Development Alexei Ulyukayev and Central Bank chairman Elvira Nabiullina
Government meeting
Dmitry Medvedev: Good afternoon, colleagues. It’s another warm day today. We've got quite a few important issues to discuss, such as the draft forecast plan and property privatisation policy priorities for 2014 - 2016. These documents have been reviewed and fine-tuned by deputy prime ministers several times.
The issue of privatisation always creates a lot of controversy. It’s been reported to me that the final version has not met with any objections from ministries or departments. As you are aware, large blocks of shares owned by the state and some facilities eligible for privatisation will have to be sold over the next three years in accordance with the schedule and in line with the established procedure. This is especially true of non-oil-and-gas enterprises, but may also apply to oil and gas companies and the energy sector.
Defence enterprises and natural monopolies are on the list of strategic companies, and decisions on them are taken separately. But this does not mean that such decisions should not be taken at all. Our goal is to sell these assets at the best available price and get as much money for the budget as we can. But that's not our only goal. Businesses need effective owners who will be able to fundamentally change corporate governance, make management more efficient, attract long-term investment, and make the companies modern and profitable. The Minister of Economic Development will talk about this, and we will also hear from our experts.
The next issue is related to the plans of federal executive bodies. They have been finalised in accordance with the presidential directive. I also looked into these documents during the meeting. Deputy prime ministers and the Government Expert Council have also reviewed them. Today, we are completing this phase of work. After their approval at this meeting, the plans will be posted on the proper websites, where any legal entity or individual will have the opportunity to read and comment on them.
The plans are based on executive orders and the Policy Priorities of the Government. They contain more than 170 goals and more than 1,000 key measures. The quality of the plans vary, as is always the case during the planning phase. Many things will have to be refined further. However, their practical implementation is much more important. Ministers are personally responsible for carrying out the plans.
Together with experts, we have looked over the documents and provided our comments. I hope that they will also be taken into account. Today, the Minister of Education, the Minister of Regional Development, the Minister of Labour, and the Minister of Economic Development will briefly update us on existing plans. Then we will sum things up.
Also today, we will discuss reforms of state academies of sciences and the corresponding draft federal law. There are six state academies of science in Russia, including the so-called Greater Russian Academy of Sciences. They are engaged in important research in various fields and make a huge contribution to the development of science in Russia. Nevertheless, their administrative system dates back to the 1930s and 1940s and is fairly outdated. This system needs to be brought up to standard. It’s important to let scientists focus on science and research, and relieve them of non-core functions, such as asset management or issues with utilities. Science academies should provide expert advice to the state in priority areas and coordinate research work.
Today, we will consider a draft law that creates specific mechanisms and a procedure for the reorganisation of state academies of sciences. The Minister of Education with speak about this in greater detail.
There are a few other questions, which are quite important for ordinary people. I would like to highlight one of them. It has to do with providing communication services in populated areas. The law envisages the installation of public payphones and opening centres ensuring public Internet access in villages with over 500 residents. In remote and scarcely populated areas of Russia, such centres often provide the only means to communicate, and the lives and health of our citizens often depend on them. Over 140,000 payphones and 21,000 public Internet access points have been installed to date. But we have to keep in mind that technology is changing. Today’s phones have little in common with telephone sets we had 10 years ago. Fewer and fewer people use payphones, while public Internet access centres is another story. Consequently, we have to revisit this issue and understand where this service is really needed and consider upgrading to more modern technology, develop fiber-optic lines and use mobile radio systems. The Minister of Communications will report on the relevant proposals. There are other issues as well on our agenda, so let’s get to them. Let’s start with the projected federal property privatisation plan. Mr Ulyukayev, go ahead, please.
Minister of Economic Development Alexei Ulyukayev reports at the Government meeting
Alexei Ulyukayev: Mr Medvedev, colleagues. I would like to present the projected privatisation plan for 2014-2016, which outlines the key principles and Government policy priorities with respect to privatisation, as well as a specific list of properties that could be privatised within the next three years. As Mr Medvedev just said, the state will fully divest stakes in non-commodity companies that are not part of natural monopolies and are not operating within the defence complex, although certain exceptional decisions could be taken with regard to these companies. Furthermore, there is a proposal to phase out unitary enterprises as an organisational and legal form and to include such companies in privatisation programmes.
The development of the programme was subject to public discussion, which lasted for two years. Discussions have also been completed within the Government. This document has been approved by the interested ministries and by relevant meetings held by Deputy Prime Ministers. Over 1,200 (1,201) out of 2,337 enterprises included in the registry of federal property are expected to be privatised, including 765 companies carried over from the previous privatisation programme and 436 new companies.
With respect to unitary enterprises, they number about 1,800, and 638 of them have been included in the privatisation programme. There are also 513 companies carried over from the previous privatisation programme after the relevant deals fell through for various reasons.
Companies that are not on this list can be divided into three groups. The first group consists of about 500 companies, in which the state owns minority stakes. These companies have become federal property in the course of the budgetary process and represent budget investments. In accordance with the Budgetary Code, they should undergo relevant registration procedures. In order to solve this issue, proposals will be drafted with the aim to contribute these minority stakes to the share capital of these vertically-integrated companies. Another 150 companies are subsidiaries of integrated corporations with only one share owned by the state. Conventional approaches will not work in this case, since the costs of managing such holdings outweigh the possible fiscal benefit. Specific technical solutions are needed with regard to such holdings. The next group includes companies that are not engaged in business activities, are being liquidated, reorganised or are under insolvency proceedings. There are about 300 such companies. Finally, about 100 companies are strategic enterprises, development institutions or companies, in which shareholders are either state corporations or the Ministry of Defence.
Concerning unitary enterprises, about 30% of the number I already mentioned, 1,800, has not been included into this draft privatisation plan. These are strategic enterprises, which can become involved in the privatisation process only by Presidential decree (about 130 companies are in this category). Additional proposals should be made concerning companies whose ownership powers are executed by the Academy of Sciences (we will speak about them later), the Presidential Administrative Directorate and some other agencies (there are about 190 companies). And, finally, there are about 240 enterprises which are slated to be reorganised as budgetary institutions and partly transferred to the ownership of Russian regions.
The privatisation programme generally includes enterprises with 100% shares owned by constituent entities of the Russian Federation. Most of these privatisation efforts will have a real fiscal effect, but a proposal was made to include 29 joint-stock companies into vertically integrated structures as an addition to holdings’ registered capital – these are, first of all, aerospace enterprises, some petrochemical companies and companies working in geology and geophysics. In addition, the future of 25 more companies is still being discussed and it was agreed that their privatisation will begin after March 1, 2014 if the industry agencies don’t take relevant decisions on them.
Dmitry Medvedev: What agencies?
Alexei Ulyukayev: This concerns the publishing and printing industry and experimental farms.
I’d like to mention also that there are limitations on privatisation imposed by a presidential executive order about 20 years ago, in 1993. We think (this has been discussed many times as well) that we need to consider abandoning these limitations, for they have long lost their economic relevance. If such a review is conducted (and we are asking for relevant instructions to prepare draft regulatory acts together with the agencies concerned) it will make it possible to expand privatisation efforts to 217 more unitary enterprises. And, finally, the project includes 94 complexes of administrative and service buildings and structures which in fact belong to the state.
In the next three years, major Russian companies will be the focus of privatisation. In the two years during which the project was being developed, roadmaps have been prepared in cooperation with industry agencies, including an in-depth study of the financial and economic state of the companies and the market, the ability of global investors to invest in the companies, and prospects for their further strategic development.
An additional proposal was made to privatise the following companies before 2016: 100% of Rostelecom, Rosspirtprom, Vnukovo Airport and Vnukovo International Airport (related to the decision to consolidate the airports of the Moscow transit hub; there may be some adjustments) and the State Transport Leasing Company (75% plus one share). The existing privatisation plans for Russian Railways, Transneft, Uralvagonzavod (up to 75% plus one share), Sheremetyevo International Airport, Inter RAO UES, United Grain Company and Rusnano include transferring them completely to the private sector before 2016. Regarding Rosselkhozbank and Rosagroleasing, it was proposed that they not be privatised, but rather that a plan be created to restructure them and turn them into agricultural development institutions. Here it is important to separate the commercial activity of the organisations from their functions as state development institutions.
Currently there are problems with selling shares at a fair price on global markets. Sometimes the real price differs many times over from the “fair” price. Due to this fact, proposals have been made to specify privatisation plans for several companies. After the three years of privatisation, Russia will maintain 25% plus one share in ALROSA, Sovcomflot, and Aeroflot, and 50% plus one share in VTB Bank, RusHydro, and Rosneft. By the end of 2016, there are plans to bring the government stake in Zarubezhneft to 90%, and by 2020 to reduce this level to 50% plus one share. Regarding the United Shipbuilding Corporation, by 2024 the government stake will be brought to 75% plus one share. Mr Medvedev has said that all the parties concerned have reached consensus and results were summed up during Dmitry Medvedev’s meeting on June 17, 2013.
Regarding the fiscal effect – the second major component of privatisation after ensuring the right balance of state and business involvement – we project that the total volume for those three years will reach 1.7 trillion roubles. Some of the funds obtained by selling major companies’ shares will be used for the companies’ development, and increasing their registered capital. Nearly 630 billion roubles which will be obtained by selling shares will go to the budget. To be more precise, nearly 180 billion in 2014, about 140 billion in 2015, and 300 billion in 2016, plus dividends Rosneftegaz will receive from selling Rosneft. In all, this equals 1.2 trillion roubles that will go to the federal budget via these two channels.
We also plan to provide the federal budget with about nine billion roubles by selling shares of medium and small companies. Considering the proposals on cancelling restrictions on federal state unitary enterprises and some other issues, we plan to introduce these changes no later than November 2014. This will enable us to include the list of companies I’ve mentioned to the federal property privatisation programme. We ask for your support. Thanks for your attention.
Dmitry Medvedev: Thanks, Mr Ulyukayev. Before we begin our discussion, I’d like to hear from Sergei Aleksashenko who will present the expert view. Go ahead, please.
Sergei Aleksashenko: Thanks, Mr Medvedev. Colleagues, the Government Expert Council has reviewed the submitted materials. We think that one of the issues that attracts broad public attention is what the state does with its property, why it does that, and how it works as a property owner. We mainly focus on the external aspects, I mean how these materials will be presented to the public. We had and reviewed much less information than Government members have, so please keep in mind that we do not have all the information, and the public has even less. Privatisation has two objectives – ideological and fiscal. The former is targeted at reducing state involvement in the economy in order to increase competition and minimise opportunities for abuse. Mr Ulyukayev mentioned in his speech that the focus will be on the fiscal aspect and large-scale privatisation.
We don’t believe that is quite correct, at least not the way it has been put. We think privatisation of small enterprises is a key issue for the state. We are talking about hundreds of entities, hundreds of enterprises, hundreds of joint-stock companies round our neck, and of course the cost of managing them is colossal, but effective control over them is lacking.
We believe that the pace of privatisation envisaged by the draft plan presented today is fairly rapid. On the whole it probably matches the goals set by the President in his executive order of May last year. But we have doubts as to whether these plans can be carried out. Consider: the privatisation programme for 2011-2013 covers 765 enterprises, minus perhaps 100, which leaves 660 enterprises that have not to this day been privatised. There are a little over six months to go, because they have to be privatised before this year is out. This has not been done. Why? What has prevented it? What is the problem? It is unclear whether these 436 enterprises will be privatised in the next three years.
Minister of Transport Maxim Sokolov and Minister of Agriculture Nikolai Fyodorov
We feel that this privatisation plan somewhat broadens the limitations or the tasks that the President set when speaking about what should not be privatised. The President made it clear that this refers to commodity sector, natural monopolies and defence industry organisations. The list has been expanded by including strategic enterprises. It’s understandable that they are not so many but nevertheless the list is being expanded. The Government overtly or covertly decides to keep some stakes. I would like to know why. The question is not whether or not it needs to be done. Our question is, what exactly will be done to them? We have the state Federal Property Management programme which holds that when the state retains some shares, the target function, ie how the state is going to run the entity, must be determined for them. If, for example, Company A or Bank B are to remain state property, we must understand what the state is going to do with them. Unfortunately, the “what” is still unclear.
Methodologically, we believe it is not quite right for all these enterprises (say, 561 in 2014-2016) that will be subsidiaries of vertically integrated structures to be considered as remaining government-owned. If you hand them over to a vertically integrated structure they will be privatised and would have also to be added to the 430, and you would end up having to privatise 1,000 enterprises within three years. That is too ambitious a target. I think Rosimushchestvo, the Ministry of Economic Development and whoever else will be involved in this will have to exert colossal efforts, and a massive organisational effort will be needed.
There is, of course, a problem with small or micro-blocks of shares (one, five, ten). I think it would be wrong to leave them under federal ownership. We understand that the current privatisation procedures are very costly. We should see if any mechanisms could be put in place so that these 185 stakes or companies do not hang round the state’s neck, and find ways to amend the Law on Privatisation, because the cost of managing 3% of the shares is comparable to that of managing 20%.
We have taken note of several specific issues. Unfortunately, like in the programme of managing federal property, the properties under the jurisdiction of the Ministry of Defence and the President’s Administrative Directorate are outside the Government’s purview (in this case the privatisation programme). In addition to Rosimushchestvo, there are two more major owners, or bodies authorized by the state to perform the functions of owner, and all this is left outside the programme.
The privatisation plan envisages the privatisation of 94 entities that are not joint stock companies or Federal State Unitary Enterprises, but that is a small share of this kind of entity. We would like to know how many of them remain, why they are not being put up for privatisation, what is preventing it.
Mr Ulyukayev has spoken about the Moscow airports. According to the press, the discussion about their fate and in general the development of the Moscow aviation hub has not been completed, and we think it is too ambitiously to declare that the state will divest them by the end of 2016. Other considerations may impede the realization of these plans.
Now, about fiscal privatisation. Mr Ulyukayev said that one often hears that bad market conditions impede privatisation and do not reflect true value. “Let us wait until conditions improve,” is the common refrain. Of course, this happens sometimes, but we think it is an excuse, a consolidated position on the part of those who do not want privatisation to take place. We have looked at the behaviour of the MICEX index since the autumn of 2009: it fluctuates within a fairly narrow range, plus or minus 5%. There was a peak when it was higher, but it never dropped below 5%. This shows that the market is basically stable. We would like to remind you that during the same period – from the autumn of 2009 – the United States government, which suddenly became a major property owner (AIG, banks, General Motors), sold a substantial part of their blocks of shares at a good profit. This shows that the market is no impediment to selling even big stakes. If I remember correctly, the US government owned more than 90% of AIG and 70% of General Motors. Nevertheless they sold huge blocks of shares and went through these procedures fairly quickly. We believe therefore that fiscal privatisation should have pride of place (I mean privatisation of major chunks of property). On behalf of the Expert Council we would advise the Government to take another hard look at the idea that has been publicly expressed on more than one occasion: to transfer the stakes slated for privatisation to the Pension Fund and count them as transfers that they will be receiving in the next three years. Then the Pension Fund would be interested in selling these stakes, or keeping them. But it will know that it has them, and it alone can decide what to sell and when and how much money it needs. Then the Government and the people, who bring direct or indirect pressure on it “to hold” and “to wait some more until the market improves”… There is a concrete interested party, the Pension Fund, and it will sell these stakes for fiscal purposes. It will also help the Government to scrap the practice of appointing its representatives to the boards of directors and issuing directives, all the procedures that hamper the work of the companies.
To conclude, I would like to say that the privatisation plan is essentially the Government’s promise to society. Even 1 trillion in three years is a lot of money. But it is not much in terms of the federal budget or the consolidated budget. I think the Government should place an emphasis on the ideological component. The most difficult thing would be to fulfill this plan. Privatising one thousand enterprises and contributing into the authorised capital of integrated structures is a challenge. But the Expert Council wishes the Government success.
Dmitry Medvedev: Thank you. Who would like to speak next? Ms Nabiullina (Elvira Nabiullina, Chairman of the Central Bank of Russia).
Elvira Nabiullilna: Thank you, Mr Medvedev. Dear colleagues. I have two suggestions, or rather requests.
Minister of Economic Development Alexei Ulyukayev and Central Bank chairman Elvira Nabiullina
First. I would like to see the items concerning a possible change of the participation share in the capital of banks beyond 2016 stricken out of the forecast plan’s text part. That would mean a possible reduction of the Government's participation in Sberbank. The Central Bank has no such plans. So I would like to ask you to drop that provision.
Second. One of the aims of privatisation, as I see it, is the development of our own financial market, our own stock market. How and where to privatise it is also a very important question. We are working hard to make the infrastructure of the Russian market more competitive, we are developing the stock market, so in terms of the development of the financial market the signal that privatisation would take place above all at Russian facilities would be highly desirable. It would be very good if this provision were included in the programme.
Dmitry Medvedev: Thank you. Anyone else? Mr Kolokoltsev please (turning toVladimir Kolokoltsev, Minister of Internal Affairs).
Vladimir Kolokoltsev: Mr Medvedev, esteemed colleagues. All the proposals and remarks of the Ministry of Internal Affairs concerning the draft forecast plan have been taken into account. On the whole we support it. Perhaps we should see if the State Unitary Enterprise Facility for the Repair of Communications and Special Technology located in St Petersburg could be dropped from the forecast plan. First, the production facilities of that enterprise are located in the buildings of the Internal Affairs Ministry’s Directorate for St Petersburg. They are used to repair the equipment destined for regional bodies, for our group in the North Caucasus, which is carrying out a counter-terrorist operation. On the whole the facilities of that enterprise form part of the integrated information and analytical support system of the Internal Affairs Ministry. We ask it to be dropped from the plan.
Dmitry Medvedev: Indeed it would be a bit strange if some cooperative were to move into the building on Liteyny Prospekt after privatisation.
Vladimir Kolokoltsev: Yes.
Dmitry Medvedev: I understand. Next.
Sergei Donskoy (Minister of Natural Resources and the Environment): Mr Medvedev, esteemed colleagues. The privatisation plan includes the institutes under the jurisdiction of Rosnedra, geological institutes. The topic was discussed with Mr Dvorkovich (Arkady Dvorkovich, Deputy Prime Minister). We have reached an agreement and we discussed subsequent consolidation of these enterprises, but this is not recorded in the privatisation plan. Perhaps it is a technical error, but we would very much like the consolidation of these enterprises to be considered.
Dmitry Medvedev: Consolidation?
Sergey Donskoy: Yes, unifying them vertically…There are some options, we will sort that out.
Dmitry Medvedev: Okay, we have taken note of it. Mr Siluanov (Anton Siluanov, Minister of Finance).
Anton Siluanov: Thank you. Mr Medvedev, esteemed colleagues. The three-year budget that the budget commission recently discussed puts privatisation proceeds over three years at 925 billion roubles. According to the materials we are now considering, the proceeds from the sale of blocks of shares over three years are expected to reach 620 billion roubles and Mr Ulyukayev said in his report that with the dividends from Rosneftegaz taken into account, we may get about 1 trillion over the course of three years. That is basically normal. The question is, how realistic is it, because we will get 380 billion roubles in dividends from Rosneftegaz in three years. If we go along with that forecast, we are satisfied with the forecast of budget revenues from privatisation, and this would help us to increase our reserve funds at the proposed rate over the three years without dipping into oil and gas revenues. We would then have to work with the Ministry of the Economic Development on breaking down the revenues by year. We have some suggestions: to pay more attention to 2015, on the one hand, and on the other hand, I still see risks in getting such a sum (380 billion roubles) from Rosneftegaz, because we do not see such resources in the company’s forecasts so far.
Dmitry Medvedev: Ms Golodets (Olga Golodets, Deputy Prime Minister).
Olga Golodets: Mr Medvedev, esteemed colleagues. Just a few days back, we looked at the budget projections, and regarding the revenue shortfalls of 560 billion roubles, we said that one of the sources could be intensification of the privatisation programme. I suggest that while approving this document, we make a parallel priority list of what we could offer to replenish our treasury and change the situation in the market. I absolutely agree with our colleagues who said that privatisation is not only about budget revenues, but about changing the economic situation of the business entities that make the decision to privatise. I urge you to move faster and to set more ambitious tasks in the form of this second plan. Currently, we really need them given the trends that have developed, especially in foreign markets, and which are looming over us.
Dmitry Medvedev: Thank you. Please (Addressing Minister of Regional Development Igor Slyunyayev).
Igor Slyunyayev: Mr Medvedev, unfortunately the privatisation plan which has been advanced does not reflect the proposals of the Federal Agency for Construction, Housing and Utilities (Gosstroy) and the contents of the instructions issued after the meeting on June 3, 2013 which was chaired by Deputy Prime Minister Dmitry Kozak.
A number of shareholding companies design and develop automated management systems. They also operate and maintain them, as well as a number of specialised facilities, including those in the field of space exploration. We believe that these shareholding companies possess unique knowledge and databases, unique engineering know-how and solutions, as well as specific projects, designs and feasibility studies regarding hazardous industrial facilities and technically complicated facilities. There are a total of 49 such companies. I would like to ask you and the Ministry of Economic Development to instruct the officials concerned to specify a list of companies that are due to be privatised in 2013 and 2014.
Dmitry Medvedev: Thank you. Go ahead, please (Addressing First Deputy Prime Minister Igor Shuvalov).
Igor Shuvalov: Mr Medvedev, colleagues. The plan the Ministry of Economic Development is submitting is indeed very complicated. Mr Sergei Alexashenko has correctly said that it is ambitious. At the same time, we have not always succeeded in implementing specific plans which were approved in previous periods. Mr Medvedev, I must say that we are not trying to use the so-called unstable market as an excuse. And we report these issues to you all the time. In reality, we don’t think that the market is bad, but we consider it to be complicated for us. For this reason and, incidentally, for certain other reasons, we have failed to conclude several deals. For instance, we've always intended to privatise Sovkomflot but somehow we've never managed to achieve this objective. But even given these difficult market situations we managed to conclude a lot of good deals last year. This includes the Sberbank deal, VTB and the seaports deal. On the whole we expect this plan to be fulfilled and we understand that it can be implemented. Mr Medvedev, we informed you about the most important projects at a separate meeting, including projects which should either be coordinated with the President or approved by him, as well as projects being debated by ministries and departments. Therefore the document being submitted for approval today is not some plan reflecting the Government’s wishes but is in reality a plan for our work.
As for specific positions, I would like to ask your permission to say just a few words about VTB and Sberbank. Mr Medvedev, in her report to you at the meeting, Ms Olga Dergunova explained the decision to mention Sberbank. In fact, the Government has no intention of selling Sberbank shares at this stage. We would simply like to send out a clear message that we definitely have to consider how many Sberbank shares the state would own through its Central Bank stake if it reduced its stake in VTB well below a controlling stake. The Ministry of Economic Development and the Federal Agency for State Property Management believe that the state should not reduce its share of VTB. VTB would start losing its competitive advantage if the state does not reduce its own stake in Sberbank. This is what has been discussed. We may not have found the entirely appropriate words for this but what we had in mind is that in any case the President, the Prime Minister and, of course, the State Duma will have to make the relevant decision about Sberbank. You see, this is a legislative decision outside the remit of the Government and the Central Bank, so it needs to be made by the highest national institutions of state authority.
As for airports of the Moscow aviation hub, Mr Alexei Ulyukayev has discussed Vnukovo Airport but in fact at the meeting we agreed that this also includes Sheremetyevo Airport and that we are moving to establish the Moscow aviation hub. This means that all three largest airports will be privatised. We need to consolidate specific assets at Vnukovo and Sheremetyevo as soon as possible.
Speaking of the stock exchange, I completely support everything that Ms Elvira Nabiullina said. If we send out this message then this will become a positive development. By the way, Mr Medvedev, when we considered this issue at our meeting with the President, we said that some exceptions were possible on specific deals that are due to be concluded separately, including the complex placement of shares on the Moscow stock exchange and elsewhere. But on the whole we should consider the placement on the Moscow exchange as the main rule.
As for Rosneftegaz, Mr Anton Siluanov receives dividends here legally, but it's still a privatisation transaction. If the deal for the sale of Rosneft shares goes through we will receive the money in the form of dividends. This is like receiving Sberbank share sale revenues through Central Bank profits. Although this will in legal terms amount to dividend payments, in reality it's an asset sales transaction.
Mr Medvedev, I would like to say a few words about companies and enterprises which are listed among strategic enterprises, including what was reported to you at the meeting and what has been discussed at meetings chaired by Mr Arkady Dvorkovich and myself. This includes, for example, the privatisation of a package of Russian Railways shares. You see, we are currently unable to completely resolve this issue. Of course, we will have to receive the President’s consent and to formalise it in line with the legislation. Currently, the Ministry of Economic Development is proposing a very smooth and soft privatisation plan for Russian Railways by using the assets of a state managing company, i.e. pension savings and private pension funds. We would choose this option if this decision is taken and legally formalised. Right now, this is just a Government recommendation. Everything linked with the list of strategic enterprises and companies currently being introduced by us into the programme is something we will work on with the President and the Presidential Executive Office. We are unable to resolve this issue in advance.
Mr Medvedev, there has been a lot of discussion on the issue of transferring the remaining shares into the Pension Fund of the Russian Federation. At some stage it might be appropriate to transfer these shares to the Pension Fund but without reducing the size of the Pension Fund transfers. If we merely agree to this then the Russian Federation would make a certain contribution to expanding the property assets of the pension system and it may even be appropriate to do so. If the burden on management for the Russian Government becomes too great then it would probably be appropriate to conduct this operation but not to link it with a reduction in the size of budget allocations.
Dmitry Medvedev: Thank you, Mr Shuvalov.
Government meeting
Let us sum up the results. Mr Shuvalov has just said, as some other colleagues did earlier, that the privatisation plan had never been carried out. The reason is rooted in economic situation and, let's be honest, in the lobbying efforts of certain agencies and certain officials, who are frequently ready to bend over backwards to prevent something from being sold, which for them means losing control over a range of property. This is wrong. The state should be as big as its targets for today. We don’t have a socialist planned economy. This is why I agree with those who say that fiscal goals are not what privatisation is primarily about. Privatisation is far from pursuing only fiscal purposes, it’s primarily a reference point indicating the direction in which the economy is going to develop and explaining what kind of economy we want to create. It is desirable, therefore, that we carry out the existing ambitious privatisation plans as far as we can. These plans are really complicated and a lot of work lies ahead.
Some colleagues said that there were a number of restrictions imposed by the Government on its own initiative over and above the restrictions that already exist at the level of laws and bylaws of presidential executive orders type. We should investigate this. If this is really the case, all unnecessary restrictions should be lifted. What do we need them for, if no one is tying our hands? I am not prepared to link this to some companies. Look into this once again, please.
Where shares of bank capital assets are concerned, this decision should be accepted using a specific procedure. If the wording is inadequate, find better words. But the decision should be accepted in no way other than by using the established procedures.
Where privatisation at Russian locations is concerned, I naturally support this idea as well. We should try to make it as open and large-scale as possible. Pointers must be provided indicating that we will seek to achieve this effect. We can write this either in a programme or in a draft protocol decision.
Colleagues mentioned certain facilities. I will of course order an investigation. It’s a workshop at 4 Liteiny Prospekt and 19 Kaliayeva Street, as I understand. We should see what kind of workshop it is. We won’t privatise anything we don't have to.
With regard to consolidating businesses, as Mr Donskoi (Sergei Donskoi, Minister of Natural Resources and Environment) suggested… Okay, this also needs to be analysed and reflected.
The Ministry of Regional Development said something about Gosstroy’s facilities (Federal Agency for Construction and Housing and Utilities). Please investigate what should and what shouldn’t be privatised there.
That's about all with regard to what we’ve heard. I would like to stress once again that privatisation is the common goal and an ideological issue for the Government. And I ask everyone present here to keep this in mind in the future.
The next item on today’s agenda is about the federal executive authorities’ action plans. I’d like to ask our colleagues to give us short three-minute reports from their side on what they are planning to do. Let us begin with Mr Livanov (Dmitry Livanov, Minister of Education and Science). Over to you, Mr Livanov.
Dmitry Livanov: Mr Medvedev, colleagues, the Ministry of Education and Science has mapped out nine main goals and two auxiliary ones. The first goal is to ensure 100% accessibility of preschool education for children aged between three and seven on the basis of the new federal state educational standard. We plan to phase out waiting lists and to transit to new requirements to be applied to the infrastructure and content of preschool education.
The second goal is to bring school education into conformity with the preferences, abilities and plans of schoolchildren and their families as well as with Russia’s long-term development goals. There are plans to develop the school infrastructure, introduce modern educational standards on a wide scale, and improve the performance of Russian schoolchildren in international comparative studies of education quality.
At the Government meeting
The third goal is to promote an effective child socialisation system and to identify and encourage young talent. We will significantly increase the enrolment of children in additional educational programmes and put in place a system for identifying and supporting young talent. Specifically, new specialised schools for gifted children will be set up.
The fourth goal is to bring vocational training programmes into line with the needs of Russian society and the economy. We will restructure the network of higher educational establishments while encouraging priority development of a system of secondary vocational training. We will also seek to boost the international competitiveness of Russian universities, in particular their entry into the leading international university ratings.
The fifth goal is to make education accessible for children and young people with disabilities. We will ensure 100% accessibility of distance education for children who qualify for home learning.
The sixth goal is to improve the efficiency of placing orphans and children deprived of parental care with Russian families. As a result of our efforts, the number of orphans and children deprived of parental care registered in the state database has been halved, falling from 120,000 to 60,000. We will implement socialisation and support programmes and programmes aimed at preventing child abandonment.
Three goals are related to the field of science. We plan to promote the HR potential of science and overcome the generation gap in Russian science. We will implement a number of measures designed to reduce the average age of researchers and create promising career tracks for young people planning to make science their profession.
The eighth goal is to increase the efficiency of Russian science and its international competitiveness. We are planning to boost the share of Russian publications in international scientific journals and the number of patents drawn up by Russian inventors.
The ninth goal is to encourage points of growth in the field of science by creating a modern research infrastructure. We will implement several mega-science projects and establish 1,000 new laboratories in universities and scientific centres. We are also introducing two general indicators related to the system of education and the system of science. The proportion of value added created in education is set to increase from 3.1 to 3.6% of the national figure, and in research and development from 1.4 to 2.3%. These last two goals are auxiliary and are aimed at creating an open education system and an independent education quality assessment tool.
Dmitry Medvedev: Thank you. Mr Slyunyayev, please go ahead.
Igor Slyunyayev: Mr Medvedev, the Regional Development Ministry has worked out a plan for 2013-2018 consisting of five major goals and 25 key steps, in line with the your and the President’s instructions.
The first goal is improving people’s living conditions and the quality of housing and utilities services. The main steps to be taken to attain this goal include moving residents from old and dilapidated buildings, providing new housing to war veterans and people with disabilities who need better housing, as well as providing government support to certain population groups such as young researchers and large families.
It is also important that we make mortgage loans more affordable. Our task is to increase the number of mortgage loans taken to 815,000 by 2018, while reducing loan interest (the refinance rate minus 2.2 percentage points), and to create incentives for investment in the housing and utilities sector.
The second goal is boosting housing construction. We plan to increase the volumes of new ready-to-use housing to 83 million square metres per year by 2018 while cutting its cost by 20% from the market level. The main steps will be to add some of the land plots managed by regional or city governments or local elected authorities to the land fund for residential development, building public services and utilities and engineering infrastructure in those areas, cutting administrative barriers in construction, implementing comprehensive urban development projects and promoting the building materials industry.
The third goal is to even out the socio-economic development level of various Russian regions. As a result, people living anywhere across Russia should be entitled to receive the same range of state and municipal services of the same quality. We plan to create 534,000 high tech jobs by 2018 as part of government programmes that the Ministry is responsible for.
The fourth goal is supporting ethnic peace and civil unity. Russia is home to 193 ethnic communities which speak 277 languages and dialects. The main factor that brings us close is that all of us belong to Russian nation. We have made a commitment to work to ensure that 64% of Russians identify themselves as one nation (only 45% said they did this year), and that 61% would assess the current ethnic relations as satisfactory (51% this year).
Partly replacing immigrant workers with resettled Russian nationals should ease ethnic tensions. The resettlement programme is designed to ensure the annual resettlement of at least 50,000 compatriots living abroad to Russia.
And lastly, the fifth goal is to complete preparations for the 2014 Winter Olympic Games and to make rational and reasonable use of the Olympic facilities after the Games. That concludes my report.
Dmitry Medvedev: Thank you. Mr Topilin, please proceed.
Minister of Labour and Social Security Maxim Topilin and Minister of Regional Development Igor Slunyayev
Maxim Topilin (Minister of Labour and Social Protection): Mr Medvedev, colleagues. My ministry has updated the plan, which has five goals. The first goal is to ensure decent jobs and wages and is divided into four subgroups. The first is about developing a national system of professional certification, which includes reviewing qualification requirements for professionals, approving over 800 professional standards and creating a basic professional training centre. We believe this will ultimately increase the proportion of highly-skilled professionals to one-third of skilled workers.
Another subgroup sets the goal of raising the minimum wage to a subsistence level by 2018. We have increased salaries in the public sector in accordance with the parameters outlined in the presidential executive orders based on the quality of work done and the amount and quality of services provided. We also need to ensure the transparency of salaries of the heads of government agencies, to abolish unjustified differentiation of manager salaries and the wages of other employees, and to limit payments to the heads of state companies.
We are drafting laws covering these goals and will shortly submit them for approval. As a result, real wages should grow by 40%-50% by 2018.
This goal also entails taking measures to improve the quality of services in the field of employment, in particular reducing the waiting time for state services to 15 minutes. We need to create 14,200 jobs for people with disabilities every year. Measures will also be taken to improve working conditions. We will adopt a law on special evaluations of working places designed to lower rates for the trades included in the list depending on the improvement of working conditions.
The second goal is to pay decent salaries to people who have worked long and honestly. We will adopt laws related to the pension reform by the end of this year. As a result, pensions should be increased to double the subsistence minimum of pensioners by 2018, pension rights are to be converted in 2014, the period of preparations should be completed, and the system should start operating in 2015.
The third goal is to improve the demographic situation. We will implement programmes of support for families upon the birth of their third child, prepare proposals for extending the maternity capital programme and implement measures designed to ensure employment for women on childcare leave. As a result, the overall fertility rate should rise to 1.753 children per woman by 2018, with the share of third children amounting to 13.5%.
The fourth goal is about improving social protection on the basis of recipient-oriented schemes. There are plans to implement the law on the basic principles of social services, which is to be adopted by the State Duma by the end of this year. The regulatory documents on its implementation are to be adopted in 2014-2015.
The target is to get rid of waiting lists for permanent or temporary (up to 6 months) admission to social protection facilities, to speed up the provision of social services and to attract non-profit organisations into the sector. We also need to ensure the rights of people with disabilities. We expect the number of disabled people who positively assess the public attitude to their problems to reach 49.6% by 2018. We will also implement measures planned as part of the Accessible Environment programme.
The fifth goal concerns the civil service and is about choosing candidates for civil service openly, transparently, objectively and professionally and for ensuring access to the unified database of vacancies. Measures will be taken to introduce obligatory trials for civil servants and to ensure their professional adaptation, as well as to mould public opinion in evaluating the performance of civil servants.
Yesterday we held an Open Ministry meeting with invited experts. We discussed the plan with them and listened to their opinion. We will also attract experts during the implementation of the plan to discuss our goals, their deadlines and ways to achieve them.
Dmitry Medvedev: Thank you. Does anyone want to say something? Yes, Mr Ulyukaev, go ahead.
Alexei Ulyukaev: The action plan of the Ministry of Economic Development consists of nine major goals that should ultimately ensure changes in the key characteristics of our economy and economic regulation. The first one is creating a comfortable business environment by implementing the roadmaps of the National Entrepreneurial Initiative (13 roadmaps, most of which are in effect, some of which are being refined), further development of the regulatory impact assessment system and its spread from the federal level to the regional and municipal levels as well.
The second one is designing a support system for small and medium-sized businesses, primarily by securing affordable credit resources, setting up warrantee and insurance mechanisms, expanding property backing of small and medium-sized businesses, simplifying procedures of running a business which includes shedding limitations on the size of the purchased premises, and more. The next task is supporting export, above all non-oil-and-gas export, securing credit backing and changing the core role of trade delegations. We have a respective project – trade delegations as a service institution to accompany businesses. We have already concluded 50 agreements with large companies on such accompaniment.
The fourth task is supporting technological innovations through the development of technological forecasting, raising the efficiency of mechanisms for intellectual property management and work in the area of technological platforms and innovative territorial clusters.
The fifth is increasing the quality of state services. We are creating a network of integrated government services centres for providing state and municipal services according to the “one-stop” principle. The number of such centres will reach 2,500 by 2015, and we have set the task of cutting the average waiting time for obtaining services to 15 minutes in 2014.
The sixth is increasing the effectiveness of the budget expenses through the contract system of state procurement and the introduction of a mandatory public technological and pricing audit of large investment projects, which are carried out with the state’s participation on a pay-back basis.
The seventh – raising the effectiveness of federal property management, including the targets we discussed earlier today regarding privatisation, and enhancing the efficiency in the system of corporate management accompanied by a proper system of monitoring of the use of federal property, which will still belong to the state.
The eighth is the advancement of the country’s economic interests abroad, primarily through two institutions: the Customs Union and the World Trade Organisation. We should seriously increase the efficiency of using these.
And the ninth is raising the information transparency of the bodies of state authority and ensuring information transparency of all organisations.
Dmitry Medvedev: Thank you. Mr Shuvalov (addressing Igor Shuvalov). You also summed up some results. Just a few words, please.
Igor Shuvalov: Mr Medvedev, colleagues, after a meeting with the President and receiving his instructions on working out the performance efficiency indicators of the ministries and departments, and following the instruction that you issued, Mr Medvedev, that all the materials should be based on the President’s executive orders of May 7, 2012 and the Government Policy Priorities – these are the principal documents that all those indicators should be based on. And we should not make up new mandates, new obligations with those indicators. The key thing is that we should sort out all the goals that were declared earlier into concrete materials, and turn them into results that are accessible by the public.
Each of the Deputy Prime Ministers worked in their domains. Mr Abyzov (Russian Minister) and I had a larger perspective, looking not only into the agencies I deal with on a daily basis, but also into others among the most important ministries and agencies. Mr Medvedev, I can say that we have not yet completed that work from the point of view of methodology. But in the period from the meeting with the President till now, the materials have become significantly better. What we agreed on at the meeting with you, that it should be a complete version supplied with brief references that are completely accessible to the population… Yes, here is an attempt that lies before you. The Ministry of Labour and Social Security tried to do it. We do not yet have such a short version on all the departments showing annual Government plans, with specific results attained. And we have agreed, lest doubts may arise that it is just an empty declaration, to underpin it with more detailed materials with instruments showing how it is being achieved, and the budget funds that are allocated on that work. However, even the matters reported here by the Ministry of Regional Development, for instance, in the area of housing policy… I think there are certain things there that should be amended because they are not quite transparent for the people: how affordability of housing will change relevant to different categories of housing year by year. Anyway, the work has been basically done, and it is grounded on the state programme which has been adopted. And we can basically say this about any ministry or agency.
Regarding Mr Ulyukaev’s report, I can say that we began with the most detailed plans of the Ministry of Economic Development, and their materials are still the most explicable, yet they also need to be fine tuned. In this connection, Mr Medvedev, I would ask for your decision that the materials be published on the internet (they will be offered for public discussion), and we together with public organisations and the Government Expert Council should start discussing the results that the Government will show in each of the five years. But at the moment it is already a result different from what we had a fortnight ago.
Dmitry Medvedev: The work has been finished. The plans should be published. We should start implementing them. They are, actually, an inalienable part of the ministries’ routine, and it is evident that now we have what in Soviet times was called “The Plan is a Law.” Get to work! The implementation of the plans will be double-checked – by the state, and by public structures – in any case, the monitoring will be done. I hope the experts will lend a helping hand. There may be some adjustments, but without overhauling the programme goals. Whatever happens should be naturally based on the wording of the executive orders. Reports should be made in the case of any significant deviations so as to figure out what should be done next. The reports should be presented following the established procedures; we have spoken about that at the meeting.
And finally, the last thing I wanted to say but not the least important. I said at the beginning: there should be personal responsibility for the implementation of a plan. We have to enter it into the protocol. Agreed? Let's proceed.
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Minister of Education and Science Dmitry Livanov speaks with journalists following a Government meeting
Minister of Education and Science Dmitry Livanov speaks with journalists following a Government meeting
Moderator: Good afternoon, colleagues. This briefing will focus on the draft law on reforming the Russian Academy of Sciences, which will be submitted to the State Duma soon. Mr Livanov will cover the fundamental features of this document.
Dmitry Livanov: Good afternoon, colleagues. First, I would like to say a few words about the work that went into this draft law.
The Russian Government has provided consistent support of fundamental research in recent years. Suffice it to say that the funding of the fundamental research rose from 8 billion roubles to 83 billion in a matter of 10 years. Several Russian universities and research organisations under state academies of sciences have retained their leadership positions in the international community. At present a single programme of fundamental research, which provides for the coordination of research conducted by state academies of science, leading universities, and research centres, has been put together. Federal and regional development programmes for research universities are being carried out, new mechanisms of international expertise during the selection of fundamental research projects have been tested and scores of new research laboratories with the participation of leading international scientists are being set up. Finally, the decision was taken to increase the financing of public research funds. However, all these measures have so far failed to turn the situation around in the field of fundamental science. Our country's share on the global scientific market continues to decline: Russia accounts for only about 2% of the total publications in international scientific journals. Russia is increasingly lagging behind not only the traditional leaders in this field, but also the leading fast-growing economies.
Despite the fact that almost 71% of appropriations on fundamental research from the federal budget go to institutes run by the Russian Academy of Sciences, and another 9% to other state academies of sciences for a total of 80%, the average age of a member of the academic staff in the scientific sector is rising. In 2012, over 40% of scientists were of retirement age. This is nothing short of a staffing disaster. At the same time, the number of specialists and researchers of the most productive ages, between 30 and 49, is declining. These trends are fraught with significant risks of Russia permanently losing its status as a leading scientific power, not in the long term, but already in the medium term.
Meanwhile the practice in those countries which are steadily increasing their scientific potential offers an example of effective forms of organising fundamental science, which for all their variety imply a clear division of the functions of scientific expertise and property management as well as periodic assessment of the activities and commitment to support the most advanced research collectives, close integration of fundamental science and universities, transparency, accountability to the state and society. This is true not only of the leading industrial countries such as the United States, Germany, Great Britain, France, Italy and so on, but of the states where science management originally followed the Soviet model but was subsequently transformed in the process of market changes: I am referring to China, Kazakhstan and many Central and Eastern European countries and so on. So the key obstacle to the successful development of fundamental science in Russia today is the outdated organisational structure of state academies of sciences.
Under the current model of state academies of sciences the functions of property management and management of scientific research are not separated, there is no mechanism of external control of the quality of scientific results and the mechanism of allocation and spending of money is not transparent. Although in a number of areas Russia still has successful internationally competitive research teams, the less than optimal structure of the government sector of fundamental research holds back their development and prevents the emergence of new points of growth.
We have singled out the following basic principles of the future organisation of the sector. First, the development of targeted support of competitive scientific collectives and broader use of the practice of financing research groups through tenders while substantially reducing the share of financing according to cost estimates. The key object of financing under the new model will be a scientific laboratory of groups of scientists working together on serious research tasks and achieving significant results recognised by the scientific community. Second, the launching of mechanisms of continuous staff renewal in science, including a modern human resource management system and a transition to the signing of effective contracts between the state and scientists. Finally, the introduction of financing mechanisms that stimulate a constant quest for international-standard results. And finally, changing the role of scientific organisations and institutions to turn them into a support platform for scientific teams, changing the model of managing and financing institutions. This is the basis of the draft law currently pending before the Government. The following are its main elements.
First. A public-state membership-based association –the Russian Academy of Sciences – is being created in the Russian Federation. It will be a community of outstanding scientists engaged in research, expert and promotional activities, fulfilling the function as the most important communication platform for the scientific community but which does not perform the function of managing property and does not have any scientific organisations under its jurisdiction.
Full and corresponding members of the three academies –the Russian Academy of Sciences, the Russian Academy of Medical Sciences and the Russian Academy of Agricultural Sciences – will become parts of the newly created Russian Academy of Sciences upon filing an application. They will form a single authoritative scientific community representing all research areas. The state, for its part, will provide financial support for the activities of this academic community, ensure its genuine independence and make the most use of its expert potential.
The Academy of Sciences will play a much greater role in making state decisions not only in the field of science but also in the areas of social development and the economy.
Second. The existing Russian Academy of Sciences, the Academy of Agricultural Sciences and the Academy of Medical Sciences, which presently exist as federal state budget-financed institutions, will cease to exist from the moment the new public-state organisation, the Russian Academy of Sciences, is created.
The Russian Academy of Architecture and Construction, the Russian Academy of Education, the Russian Academy of Arts (three more state-run academies) will retain their status of federal budget-financed institutions established by the Government, but the powers of their founder may be transferred to authorised federal executive bodies. The same applies to the organisations under their jurisdiction.
Third. A federal executive body will be created to manage the property of the scientific institutes of the state academies of sciences.
It will carry out the functions of delivering state services and managing the state property of the scientific institutes of the Russian Academy of Sciences. It will be called the Agency of the Scientific Institutes of the Russian Academy of Sciences. The Agency will manage the scientific organisations which are currently accountable to the three academies of sciences, i.e. the Russian Academy of Sciences, the Academy of Medical Sciences and the Academy of Agricultural Sciences.
The activities of the scientific institutions under the jurisdiction of the Agency will be financed through budget allocations envisaged for the upkeep of the institutions under the jurisdiction of the academies of sciences, for scientific research in accordance with the Federal Fundamental Scientific Research Programme for 2013-2020. Thus, as far as the scientific institutions and the people who work there are concerned, the reorganisation will bring no change, they will go on working as before, they will receive their salaries and their research will be financed.
The Agency of Scientific Institutes will appoint the heads of the research organisations under its jurisdiction taking into account the proposals of the Presidium of the newly-created Russian Academy of Sciences, which is a public-state association. To provide organisational, legal, analytical, information, financial and material-technical support to the Russian Academy of Sciences a new state institution called “The Apparatus of the Russian Academy of Sciences” will be created, which will provide all organisational and financial support for the activities of the public-state association.
The fourth draft law spells out the status of the long-term programme of the Russian Federation for fundamental scientific research. It will be approved by the Government of the Russian Federation with the consent of the Russian Academy of Sciences. The Russian Academy of Sciences will play the key role in determining the priorities of fundamental research and in general the priorities of the scientific and technological development of Russia, a role that will be greater than it is today.
Without going into too much detail, the draft law identifies the main goals of the creation of the public association “The Russian Academy of Sciences,” its main areas of activity, structure, the principles of forming its governing bodies, the procedures for registration and liquidation.
I would like to focus on some important transitional provisions.
The people who on the date the draft law comes into force hold the title of Full Member or Corresponding Member of the Russian Academy of Sciences, the Academy of Medical Sciences and the Academy of Agricultural Sciences, from the moment of the registration of the public-state association The Russian Academy of Sciences will acquire, upon their application, the status of Member of the Russian Academy of Sciences. Within three months of the draft law coming into effect, the Government will appoint liquidation commissions for the three academies, set out the procedure and timeframe of their liquidation in accordance with the laws of the Russian Federation. Within the same timeframe the Government will approve the criteria and procedure for evaluating the activities of the organisations that report to the Russian Academy of Sciences, the Academy of Agricultural Sciences and the Academy of Medical Sciences. Within six months of the approval of the criteria and the procedure, the Government will evaluate the performance of academic research organisations, including those for the delivery of research services and organisation of the social sphere, and approve three lists of organisations. The first list will include those to be transferred under the jurisdiction of the Agency of Scientific Institutes, the second, those organisations to be transferred under the jurisdiction of other federal executive bodies and the third, organisations that will be subject to reorganisation. The scientific institutes transferred to the Agency of Scientific Institutes will retain the title of “Scientific Institute of the Russian Academy of Sciences.”
Scientific institutes under the Agency’s jurisdiction will be financed fully out of the federal budget, with at least 50% of the funding to be distributed by tender among the research collectives in the form of grants. A system of expert assessment for these grants will be organised.
Academic stipends, i.e. monthly lifelong payments, will be substantially increased. For full members of the Russian Academy of Sciences they will be at least 100,000 roubles, probably more.
The draft law would establish a three-year moratorium on the election of new members of the Russian Academy of Sciences, during which time the powers of the elected President of the Russian Academy of Sciences will be confirmed as the President of the newly created public-state association “The Russian Academy of Sciences.” The elected presidents of the academies of medical and agricultural sciences will be confirmed as vice-presidents of the new Russian Academy of Sciences. That is all.
Question: Has the Government approved the draft law today?
Dmitry Livanov: Yes, of course.
