“The Government of the Russian Federation <…> shall submit to the State Duma annual reports on the Government’s performance, including on issues formulated by the State Duma.” (Constitution of the Russian Federation, Article 114, Clause 1, Subclause “a”).
Excerpts from the transcript:
Annual Government report on its performance to the State Duma
Mikhail Mishustin: Mr Volodin, Ms Matviyenko, deputies of the State Duma, colleagues,
Today is the first time that I am presenting a report on the results of the Government’s work to the State Duma. This Government was formed in January, after the President delivered his annual Address to the Federal Assembly, in which he set out our tasks and targets for the immediate future. We used them to formulate the main goal of this Government, which is to improve the quality of life for everyone in the country by boosting the economy and developing the social sphere, which fits in with the task of attaining the national goals set out for us by the President.
We started working on the basis of five fundamental values.
The first one is to ensure that all government services are focused on meeting public needs. We must act openly and maintain dialogue with the people on the basis of mutual respect and trust. Next, we must lead the way in the sphere of ethical behaviour. Furthermore, we must work as a team regardless of departmental confines. Most importantly, the result must be more important to us than any formal procedures and regulations.
This is how we work, relying on these values, and we did not start from square one. I would like to express our gratitude to the preceding Government, which has created a solid foundation for us in accordance with the tasks set out by the President. It is thanks to this that we have macroeconomic and budgetary stability in the country.
Russia’s National Wealth Fund had almost reached 8 trillion roubles by the beginning of 2020. In 2019, inflation and unemployment stood at their lowest, while the public debt level was 12.3 percent of GDP, and the country’s gold and foreign exchange reserves increased to $554 billion.
The above trends taken together provided good prerequisites for a breakthrough. However, at the onset of the year, we faced a powerful challenge – the novel coronavirus infection. True, the world has seen infection outbreaks before. But now, with the level of global interconnection, the virus began to spread in leaps and bounds across all the continents. The world has never seen anything like this before. The situation was further complicated by the spread of the virus as well as certain countries’ moves to increase oil production and this led to serious imbalances on the oil market. This caused a collapse in oil prices, increased volatility on financial and foreign exchange markets, and triggered capital outflows.
The combination of such adverse factors significantly complicated the situation and required urgent and broad measures. For many people in Russia, the threat of contracting the virus was not apparent until mid-March, when air traffic services with a number of countries had to be limited. But we were proactive. On behalf of the President, we began to take measures to contain the virus well in advance, although there were no confirmed cases of the coronavirus infection in our country.
Our actions were thought-out and proactive. We relied on research and recommendations of Russian specialists, as well as on international experience. We launched a most powerful analytical centre. I regularly met with doctors, scientists and experts to develop an optimal strategy, an algorithm for introducing restrictive measures and their subsequent phased listing.
As soon as on 30 January, we limited air traffic services with China, among the first countries to do so. The next day, the passenger railway service to that destination was shut down. We also restricted land crossing of the border in the Far East. Once again, Russia did so among the first in the world to protect our people and buy time to prepare the healthcare system for COVID-19 patients.
As early as by 30 January, we completed an audit of the available hospital beds, PPE stockpiles and equipment in all regions. The Coronavirus Response Centre and the Coordination Council were established. The State Council Working Group also made a major contribution. We allocated the necessary funding and resources without delay, helping state institutions and society combine their efforts to fight this dangerous infection.
This prevented a collapse similar to the one we winnessed abroad, such as in in Italy, Spain and the United States.
Russian epidemiologists, scientists and doctors joined the fight against this disease early on. The Russian specialists were among the first in the world to develop effective testing kits and are hard at work on creating a vaccine.
In these circumstances, we had to earmark an additional 170 billion roubles to buy medical equipment, repurpose hospital beds around the country, pay out bonuses to doctors, and support regional mandatory health insurance funds. More than 180,000 hospital beds were created in infection disease wards, actually 184,000 to be more precise, in record time, including purchasing equipment and PPE. Regions received some 66 billion roubles in subventions from the federal budget alone to these ends.
That said, our doctors, nurses, public health workers and ambulance drivers were the main heroes in the day-to-day struggle to save people’s lives and health. At first, there was a shortage of medical staff for working with infection cases, so doctors and nurses from other departments were called in, including senior students from medical schools and volunteers. More than 1.5 million benefited from training offered using interactive educational modules. They put their lives at risk to take care of those who fell ill, sometimes even living in hospitals without seeing their families for months.
The President instructed the Government to devise financial support measures for these people. More than 290,000 medical workers and other professionals received presidential bonuses for their important work. Over 400,000 people working with high-risk groups received special bonuses. And those who got infected while treating coronavirus cases also benefited from dedicated insurance schemes.
Mikhail Mishustin: “We can say with confidence that Russia is coping with the coronavirus infection better than many other countries. We were proactive. Our actions were well-pondered and proactive. However, we will stay vigilant until a reliable cure for the coronavirus becomes available. The results of clinical trials for two vaccines are already being reviewed. I’m convinced that our research results will enjoy high demand in Russia and around the world.”
Centralising the sanitary-epidemiological surveillance system enabled us to mobilise all its human resources, and step up controls on the borders of the Russian Federation. Taken together, these measures helped us save thousands of lives. Looking back, I have no doubt that the decisions that we took were timely and justified.
More than 14.5 million coronavirus cases have been confirmed worldwide. The disease has claimed over 600,000 lives. Some 790,000 people fell ill in the Russian Federation and, unfortunately, almost 12,500 could not be saved. Each of these deaths is a tragedy. I deeply sympathise with the loved ones of every person who was lost to this horrible novel infection.
The Government was working literally around the clock. All of our decisions were aimed at one thing, saving people’s lives. The President has spoken about this. And this is how we will continue to act.
Now we can say with confidence that Russia is dealing with the coronavirus better than many countries. The number of patients per 1,000 in our country is 50 percent lower than in the United States, Brazil and several other countries.
Of course, we must remain vigilant until there is a reliable treatment for COVID-19. As you probably know, clinical trials of two vaccines are currently being assessed. I am sure that our developments will be in demand in Russia and the rest of the world.
The experience of countering the coronavirus has demonstrated that our healthcare system can mobilise its resources against any serious threat. At the same time certain areas have been exposed that require additional efforts. The situation has enabled us to identify the general issues in healthcare.
Primary care – the foundation of the entire healthcare system – was charged with a significant workload during the outbreak. The President set a key task of modernising this sector, for which an additional sum of almost 500 billion roubles will be allocated for the next five years. At the same time we must not focus only on opening new modern outpatient clinics, paramedic centres but also on removing the issues that emerged in the course of healthcare optimisation.
Without doubt, we will make sure that we address the improvement of sanitary, epidemiological and infectious disease services.
The entire infrastructure that was built to counter the coronavirus and the equipment that was purchased will subsequently be used to treat patients with other conditions.
Once again, I would like to thank our epidemiologists, doctors and nurses, ambulance drivers, the entire hospital staff and social workers. I also want to thank socially oriented NGOs, volunteers and all the people who did not stay uninvolved and helped save lives during the most difficult period. These hard days demonstrated the unity of our society. I want to thank each and every one of you.
The crisis has affected everyone. Popular incomes have plunged. The business community, including entire sectors, has incurred serious losses. Those who lost their jobs and families with children fared worse than everyone else. And, of course, we had to take care of them.
During this difficult period of time, we had to make split-second decisions. The Government reduced deadlines for reviewing and coordinating documents to 24 hours. You, esteemed deputies, the State Duma and the Federation Council also worked hard. Today, I would like to specially thank you, members of parliament, for this approach.
Mikhail Mishustin: “The measures to support individuals and the economy that we have taken at the initiative of the President are unprecedented both in terms of the amount of allocated funds and in terms of the number of recipient industries. We did our best to ensure that direct financial aid reaches target recipients, primarily, families with children, as fast as possible.”
We considerably mitigated the budget policy in order to launch all the support programmes for the people and the economy. We did not cut back on spending while our incomes reduced. On the contrary, spending even increased. This made it possible to mitigate the consequences of the spread of the coronavirus infection in the country. We implemented unprecedented measures on the President’s initiative for supporting the people and the economy in terms of funding and the number of sectors covered by them. We did our best, so that direct financial assistance would reach specific recipients more quickly, families with children, in the first place. It is always necessary to spend substantial funds for raising children. If a father or a mother loses their job, and this happened quite often during the crisis, this can wreck the family budget. We cannot allow this to happen. The Government stipulated additional payments for families with children. Families raising over 26.5 million children have received various forms of support worth about 600 billion roubles. Although global challenges have created a multitude of risks for the entire national economy, the Government still prioritises the fight against poverty. Together with the President we are focusing on this subject.
The coronavirus pandemic has seriously changed the labour market. Since 1 April, the number of unemployed people, officially registered at the labour exchanges, has soared 3.5-fold. Today, their number totals about three million people. The Government has extended unemployment benefits to those who lost their jobs prior to the coronavirus pandemic by three months. We have helped people who have lost their jobs since 1 March to the greatest possible extent and increased unemployment allowances. This is over one million people. The Government spread all measures for supporting the unemployed to over 13,000 of the self-employed who were forced to shut down their businesses after 1 March. All of them are eligible for the maximum benefits equivalent to a minimal wage. I would like to note that all the labour exchanges worked online during this difficult period of time.
The labour market cannot recover without economic growth. We were well aware of that when we were deciding who should get support during the period of stringent restrictions. There was need to cut business costs as much as possible, help entrepreneurs keep their businesses and not lose their business partners. We took emergency measures to support the hardest hit industries, such as air transport, tourism, hospitality business and catering. As the crisis spread, we expanded our focus to include retail trade outlets dealing in non-food products, as well as cultural institutions and media outlets.
First of all, this applied to small- and medium-sized businesses and sole proprietors, since their staying power is not nearly as strong as that of large enterprises and companies, and they find it more difficult to keep up their operations, let alone to pay salaries to their employees amid newly imposed restrictions and forced downtime. It was critical to help these entrepreneurs to ride out the most challenging period and then have them restart their businesses.
The President approved a number of urgent measures. I will go over only the most important ones.
First, small- and medium-sized businesses were granted deferrals for mandatory payments.
Second, small- and medium-sized businesses saw the insurance premiums on wages in excess of one minimum wage reduced by half, from 30 percent to 15 percent, which is unprecedented. This permanent measure not only helped these businesses get through the difficult period, but also allowed them to expand.
Third, all taxes and insurance premiums for the second quarter were completely written off. Over 1.5 million small- and medium-sized companies and sole proprietors received such support.
All self-employed individuals were provided with additional tax capital and received tax refunds for the previous year. More than 1.5 billion roubles were set aside for these purposes.
Small- and medium-sized businesses from the hardest hit industries also received support in the form of presidential grants. Banks provided loan deferrals to the clients whose incomes fell by more than one-third.
Mikhail Mishustin: “The labour market cannot recover without economic growth. There was a need to cut business costs as much as possible and help entrepreneurs keep their businesses. We took emergency measures to support the hardest hit industries, such as air transport, tourism, hospitality and catering services, retail trade outlets dealing with non-food products, as well as cultural institutions and media outlets. Primarily, this applied to small- and medium-sized businesses and sole proprietors, since their staying power is by far not as strong as that of large companies.”
Notably, we issued interest-free loans for paying wages. Banks have concluded about 40,000 loan agreements for a total amount of about 93 billion roubles under this programme. From June 1, we launched another lending programme that included write-offs provided that the company retained the majority of its employees. These measures applied not only to small- and medium-sized businesses, but also to major companies from the affected industries and the companies operating on the consumer market.
Additional capitalisation of regional guarantee and microfinance organisations also came as an important step, allowing us to expand programmes to help SMEs at the regional level.
We provided sole proprietors and a number of small- and medium-sized companies with an exemption from lease payments for state and municipal property, thus saving them about 7 billion roubles. For those who had a lease on privately-owned commercial property, we set requirements for the deferral terms.
Some of our businesses faced even more problems, when they were asked to pay penalties for the early termination of tenancy agreements. We quickly addressed this problem together with our colleagues in the State Duma, submitting legislative amendments to protect our businesses. And now small and medium-sized businesses from the affected industries can unilaterally terminate such agreements without any penalties if the leaseholder refuses to reduce the rent or ease the lease conditions.
Backbone enterprises needed special attention. In our country, they are the largest employers for over 6 million people, and 25 percent of the national economy depends on their operations. This is why we closely monitored their financial position and, of course, coordinated a number of support measures for them, primarily a programme of easy term loans for the replenishment of working capital. Loans worth some 139 billion roubles have been taken out under it.
I would like to note once again that all our initiatives were aimed at reducing businesses’ expenses as much as possible and to prevent their financial deterioration. With this goal in view we adopted a moratorium on nearly all inspections for businesses. It included medium-sized companies and NGOs for the first time ever. Whatever inspections are really necessary are held remotely. And we believe that this practice should continue.
We have implemented the idea of automatically extending licencess. The duration of over 70 kinds of authorisation documents has been extended automatically.
Thanks to two draft laws, which are being considered by the State Duma – on obligatory requirements and on state and municipal control, we will create a basis for developing a risk-based regulatory system and the priority of proactive methods. This will prevent our businesses from spending huge funds on adaptation to new demands.
Mikhail Mishustin: “Digital transformation opens new horizons in the way people interact with the government, helping people understand that government agencies are reliable helpers operating in good faith. I strongly believe that working along these lines can help Russia become a global economic leader.”
There are many more examples of this kind. In the past few months we have also lifted several other limitations on businesses. And all these measures are effective.
Colleagues, now we need to analyse the experience we have accumulated over the past months so as to be able to relaunch our economic growth and restore business activity and dynamic development as soon as possible. Our goal is to make the system of state governance more effective, open and convenient for all users, including our citizens, businesses and public servants.
Digital transformation opens new horizons in the way people interact with the government, helping people understand that government agencies are reliable helpers operating in good faith. I strongly believe that working along these lines can help Russia become a global economic leader.
This is what we did within the Federal Taxation Service some time ago when we decided to overhaul the way it operated. We wanted tax administration to become a service that would be user-friendly, modern and tech-savvy. I think that we succeeded in this endeavour.
There are also other examples of digital transformation. People have been using integrated government services centres, banking services, and the e-government portal for quite some time now. These services became indispensible when lockdowns forced us to limit our contacts with each other and to replace face-to-face interaction with virtual communication.
Government services that previously involved extensive paperwork and in-person visits to various institutions, are now available online. People could get payments for their sick leave, without leaving their homes. Almost 3.5 million payments of this kind were processed online. We followed the same approach when processing applications for child allowances. Tens of thousands of Russians stranded abroad could use the public services portal to apply for assistance.
During the stay-at-home period, we offered virtual museum tours, webinars, streamed theatre performances and films online. The same goes for school and university students and faculty members who had to adapt to new remote learning solutions within a very short period of time. In this regard, we benefited greatly from the experience gathered by online platforms.
The Work in Russia portal enabled people to register as unemployed online, so that people could receive their unemployment benefits.
Mikhail Mishustin: “The months of living in isolation and teleworking have shown us how the digital format of interaction between people and government can be improved. It is much more convenient for people when the government automatically informs them about all the services they are entitled to and provides such services in electronic form. This is the proactive approach to our work that we are developing today.”
We established an information centre that monitored the spread of the coronavirus, and used it as a platform for coordinating interactions between the centre and the regions. It enabled us to monitor the incidence rates across the country. This centre produced a single database of the preparedness of medical institutions to accept coronavirus patients, offering the latest data on the availability of hospital beds, medicine and PPE.
All these services went through a rigorous stress test in extreme conditions, when the burden experienced by these institutions was at its peak. This demonstrates yet again that we need to implement, above all, a service model across the executive branch.
The months of living in isolation and teleworking have shown us how the digital format of interaction between people and government can be improved. It is much more convenient for people when the government automatically informs them about all the services they are entitled to and provides such services in electronic form. This is the proactive approach to our work that we are developing today.
One of these projects is the Social Treasury. It is a single digital platform for all types of social support. The idea is to provide targeted help to those who need it objectively. And, most importantly, to save people from collecting piles of paperwork and from visiting the various authorities.
We are also preparing to upgrade the medicine supply system. Starting next year, the Unified Register will go on stream – a nationwide database of citizens who are entitled to subsidised medication.
Hospitals and outpatient clinics are already embracing digital services. It is convenient for both medics and patients. The unified database of medical documents, images, tests, and MRI scans, which is now being created, will simplify decision-making and the arrangement of the best treatment regimen.
Preparations for the new academic year are already underway. We can see how important it is to have our schools, colleges and universities technologically equipped, to prepare teachers for a situation where their regular on-site work may be disrupted and they will need to transition to online learning, to create high-quality digital content and develop a regulatory framework for the digital learning environment.
The demand for distance learning is still high, with continuing education and training online becoming popular with people of all ages. Allow me to emphasise that this does not mean that traditional forms of education are being abandoned. Computers will never replace live communication between teacher and student. What we are proposing is a reasonable and justified use of digital technology in addition to traditional education. This approach also expands the possibilities of continuing education and professional development programmes.
Furthermore, we will advise universities on training qualified personnel in accordance with the needs of the regional economies. Enrolment in IT programmes should increase 150 percent by 2024.
Digital technology is also altering the labour market. It has made things easier for self-employed workers after their registration and reporting procedures were fully transitioned to an online format. Effective from 1 July, this policy has been extended to all regions. Now we need to add all formats of remote work to the legal space as soon as possible, be it temporary or permanent. It is also necessary to clarify the rights and obligations of both employees and employers within this arrangement.
Mikhail Mishustin: “The demand for distance learning is still high, with continuing education and training online becoming popular with people of all ages. Allow me to emphasise that this does not mean that traditional forms of education are being abandoned. Computers will never replace live communication between teacher and student. What we are proposing is a reasonable and justified use of digital technology in addition to traditional education. This approach also expands the possibilities of continuing education and professional development programmes.”
I know that yesterday the State Duma discussed a joint bill by the State Duma deputies and Federation Council members on amending the Labour Code. The bill was co-authored by Valentina Matviyenko and Vyacheslav Volodin, among others. I find this initiative very timely. The Government supports this bill. We expect that the amendments will serve as a stimulus for creating new jobs and flexible employment conditions. Starting next year, the Work in Russia portal will expand with an internship and employment search service for graduates. Professional training can also be obtained via the WorldSkills Russia platform that is available to both fresh graduates and working professionals.
Colleagues, since the very beginning of this emergency, in line with the President’s directives, the Government has been enforcing consistent and system-wide measures. We understood that it is necessary to quickly overcome this decline and get back on track in terms of economic growth and people’s real income in order to achieve the national development goals. We adopted an entire system of measures that proved to be much-needed at a critical moment and effective in the long term. We followed a clear strategy that now became a basis for a national action plan. It includes both anti-crisis measures that will still be in effect in the second half of 2020 and in 2021, and new steps that are to ensure the recovery of employment and people’s income, economic growth and long-term structural changes.
This requires the wide implementation of advanced technologies, new opportunities in the labour market and education, fast and quality housing construction, support of exports and extensive import substitution. Moreover, it is necessary to strengthen the ability of the economy and the healthcare system to withstand risks that may arise in the future. We must ensure economic growth and a steady rise of people’s real income. At the same time, as I mentioned, alleviating poverty remains our priority.
I would like to specifically mention the tasks by solving which we can help restore the industrial growth, expand exports and facilitate import substitution. The 2019 results show a significant increase, of about 20 percent, of the medical and pharmaceutical industries. Both of these industries are going through serious qualitative changes. New Russian medicine has been developed for treating HIV, cancer and cardiovascular diseases. All this was a source of major support when, due to the spread of the coronavirus, we needed to seriously boost production of medicine, PPE and medical devices. The pharmaceutical and medical industries handled these tasks successfully and managed to prevent any critical shortages.
Mikhail Mishustin: “The 2019 results show a significant increase, of about 20 percent, of the medical and pharmaceutical industries. All this was a source of major support when, due to the spread of the coronavirus, we needed to seriously boost production of medicine, PPE and medical devices. The pharmaceutical and medical industries handled these tasks successfully and managed to prevent any critical shortages.”
We can also see production growth in other sectors, including thanks to systematic state support we provide to industry.
Last year, civilian orders increased significantly at Russian shipyards. The orders are diverse: icebreakers, sea equipment for shelf exploration, fishing and passenger vessels.
There is also growth in the chemical industry. Over the last four months of this year, it accounted for over 5.5 percent. The defence industry is working successfully. The state defence order is being fulfilled. The volume of civilian and dual-use products has grown. Russian arms exports last year amounted to more than $15 billion. The order list exceeded $55 billion at the beginning of this year. More than 100 countries cooperate with us in this area.
The development of new areas is underway in the fuel and energy industry. The production of liquefied gas has increased, and we have begun to produce more equipment for solar and wind power stations.
We help the industries that depend on consumer demand via special targeted programmes, including aircraft and automobile production, light industry and several others. In particular, we will allocate an additional 25 billion roubles to stimulate the demand in automobile production, another 15 billion to purchase planes and helicopters for air medical services, and more than a billion for light industry.
The national plan provides for state support for many industries. Import substitution is a priority for us. To date, 420 such projects have already reached serial production, and preparations are nearing completion to launch another 950. We plan to complete the update of sectoral plans for import substitution and review them in October.
We aim at increasing our exports. The directive that will launch the one-stop shop for exporters has been signed. They will be able to quickly fill in documents, ask for subsidies and promote their products on international markets and at exhibitions.
Turning to the agro-industrial sector, its overall performance has been quite strong. Last year’s grain harvest was good, and purchases of agricultural machinery increased by more than one third. This year, we earmarked additional funds for buying more than 16,500 agricultural vehicles and equipment.
Soil improvement efforts enabled us to re-cultivate hundreds of thousands of hectares. Thousands of small and medium-sized enterprises were created, and we have offered them new opportunities with grants and subsidies, including for farmers who are just starting out.
Overall, the agro-industrial sector was less affected by the coronavirus than other industries. To keep up this momentum, we decided to increase the availability of subsidised loans.
In terms of food security, all these measures help expand domestic food production and meet market demand, as well as increase exports. Last year, agricultural goods and raw materials accounted for 6 percent of overall exports.
I strongly believe that the export support measures that I have mentioned will be relevant in the agro-industrial sector as well.
Of course, the agro-industrial sector achieved this success through the efforts of people who live and work in rural areas. A new programme to develop rural areas was launched this year, and we can already see that it is very popular. I am referring to the Rural Mortgage programme that offers subsidised interest rates. A total of 18.5 billion roubles worth of loans has already been granted under this programme. There was a proposal to add another 2 billion roubles, and I believe that it deserves our support.
Mikhail Mishustin: “Turning to the agro-industrial sector, its overall performance has been quite strong. Of course, the agro-industrial sector achieved this success through the efforts of people who live and work in rural areas. To keep up this momentum, we decided to increase the availability of subsidised loans. A new programme to develop rural areas was launched this year, and we can already see that it is very popular. I am referring to the Rural Mortgage programme that offers subsidised interest rates. Loans worth if 18.5 billion roubles have already been granted under this programme. There was a proposal to add another 2 billion roubles, and I believe that it deserves our support.”
Housing construction is always high on our agenda, since there is nothing more important for any family than to own a home. It is for this reason that last April we launched subsidised mortgages at 6.5 percent. This has been one of the most successful crisis mitigation measures. Banks granted 80,000 loans for a total of over 205 billion roubles. In view of this success, we increased the maximum loan available under the programme to 6 million roubles for the country in general, while the ceiling for people living in Moscow, the Moscow Region, St Petersburg and the Leningrad Region is twice as high at 12 million roubles.
Annual Government report on its performance to the State Duma
Resettling people living in substandard housing is another priority. We intend to relocate about 55,000 people under the programme this year.
Protecting the rights of people who invested in shared-equity construction is also on our radar. The Government has allocated an additional 30 billion roubles to the relevant fund.
To preserve jobs and the pace of construction during the coronavirus outbreak, we launched a developer loan subsidy programme and set aside 12 billion roubles for these purposes. We made additional funds available to the regions so that they could build the infrastructure necessary for the housing construction sector. We have also increased financing for the programmes to create a comfortable urban environment.
Thanks to the Government and the State Duma’s joint efforts, a package of federal laws for the industry was adopted during this session, including about the construction of infrastructure. A number of amendments make building transport facilities much easier. Changes have been introduced to urban development legislation in order to cut the time involved in the preparations and approval of the documents. The administrative procedures and the procedure for property title registration have been simplified. Now, full-cycle design-to-construction contracts can be concluded. As of 1 September, contractors under the government contracts will be determined as a result of competitive biddings, not auctions.
In addition to this, the Government has reduced by one third the number of mandatory building codes and regulations, as well as state standards, which the President has mentioned on many occasions, so we have adopted the corresponding decision.
We hope to continue this systemic work with the Duma during the autumn session as well. We plan to shorten the investment and construction cycle by at least one year.
In its economic policy, the state must act as a long-term investor. Despite the fact that almost all transport - both freight and passenger - has not yet fully recovered, we see great potential in the transport industry.
The Government portfolio includes 19 major infrastructure projects. Each transport project has a multiplier effect in related industries. These projects include expanding the Baikal-Amur Railway and Transsib, completing the construction of the Central Ring Road and building the Europe-Western China Motorway.
Russia is a vast country. Our goal is to make sure that anyone can get from point A to point B quickly, safely, comfortably and pay the lowest possible fare while doing so.
In March the Government approved the Transport Strategy to 2035. Its priorities are to ensure the connectivity of the Russian regions and affordable, high quality transport services for people.
Yes, we can and must make use of Russia’s geographical advantages, including for the development of container shipping. In April we launched a new route for container trains from the Arkhangelsk Region to the Trans-Baikal Territory. In May, the first icebreaking LNG carrier transited via the Northern Sea Route. And this is not the limit for us.
We need investment to continue developing the national economy and to fulfil the tasks set out by the President. It will allow us to launch new projects, create new jobs and keep up the interest in the introduction of new technology. It is important to launch a new investment cycle and improve the business climate. We see three focus areas here.
First, the creation of a comprehensive support system for large investment projects at the federal and regional levels, including on the basis of agreements to protect and encourage investment. The implementation of such projects, for example in infrastructure, will definitely become an economic growth driver. This will also provide support to related sectors.
Second, work out stable and clear rules for the staged improvement of the business climate. This is vitally important for the development of investment activities.
Third, the development institutions: we must take a look at what each of them is doing in reality, at their projects and results. We may have to relaunch some of them or to create new support instruments for promising sectors.
The requirements for all components of the state are changing, including for the Government. This means that we must also revise the criteria applied to development institutions. We must update and possibly revise some tasks and goals so as to increase the transparency and effectiveness of these institutions. We must monitor their operations in real time and integrate them more energetically into the overall agenda aimed at attaining the national development goals.
Our next focus area is the development of individual proprietorship and small and medium-sized enterprises. The growth rate in this sector, which went down during the coronavirus epidemic, must return to its pre-crisis level and the number of SME personnel, individual proprietors and self-employed people should reach 25 million by 2030.
Here are some of the practical measures we propose to take.
First, we plan to create a system based on an integrated digital platform that will be convenient for the operation and development of individual proprietors and small businesses, a kind of one-stop-shop where they will be able to find all the information they might need, including on loans and taxes.
Second, we aim to improve our support instruments. Yesterday the State Duma adopted in the third reading a Government-proposed law that will allow businesses to switch between tax regimes. A transition to a risk-based regulatory and authorisation system will be in the interests not just of SMEs but all businesses. At the same time, it is imperative to comply with all requirements to ensure the safety and welfare of citizens. We are planning a phased transition to a fully electronic exchange of documents within the framework of regulatory activities.
Speedy digital transformation of all aspects of society’s life is happening right before our very eyes. This opens up more opportunities for people and businesses. Companies and entire countries are largely dependent on hardware and software. Those who can provide comfortable and quality technological solutions, quickly implement them to their full capacity at home and offer them to other countries become leaders. The others, unfortunately, are destined to remain mere consumers, without their own digital platforms, software and developments.
We need a technological breakthrough. We need to develop new areas, including artificial intelligence. The President has repeatedly spoken about this objective. The Government prepared a package of measures for priority development of the IT industry. We started implementing taxation changes for Russian IT companies, supported by the necessary legislative amendments that the Government submitted to the State Duma. We will build an encouraging and favourable environment for IT businesses and innovative activity. These innovative solutions can be tested in experimental sandboxes. Colleagues, we expect that you will adopt the respective bill today.
Tourism is another promising industry.
Annual Government report on its performance to the State Duma
We have done a lot to show our country to the world. In recent years, we have successfully held large-scale events such as FIFA World Cup. The championship was a major festivity for millions of people who came to Russia from all continents. I am certain that many of them fell in love with Russia, this colourful and hospitable country that is different from common stereotypes. Inbound tourism significantly grows after such events.
The industry is currently experiencing difficulties. We must not only support it but provide conditions for its dynamic development, including by creating new opportunities for domestic tourism.
We have already granted travel companies subsidies that total 3.5 billion roubles. Last week, the Government issued a resolution to additionally allocate 15 billion roubles for developing inbound tourism. This money will be spent on partly compensating travel expenses for those people who decide to spend a holiday in the Russian regions this year. The Federal Agency for Tourism has already compiled the list of these regions. Tourists will be able to get a rebate of 5,000 to 15,000 roubles depending on their tour.
Mikhail Mishustin: “The Government issued a resolution to additionally allocate 15 billion roubles for developing inbound tourism. This money will be spent on partly compensating travel expenses for those people who decide to spend a holiday in the Russian regions this year. The Federal Agency for Tourism has already compiled the list of these regions. Tourists will be able to get a rebate of 5,000 to 15,000 roubles depending on their tour.”
I believe that ecotourism has great prospects. Last year, the Government selected eight national parks where tourist infrastructure will be built, and created five new specially protected areas. We hope that by developing this segment, we will teach people to take good care of nature. The Government will keep up its efforts to improve the legal framework for environmental protection as part of the Ecology national project, including by working on the most challenging cases to eliminate accumulated environmental damage. We will persist in our efforts to create an effective system for managing solid household waste.
Colleagues,
You represent the interests of citizens from all 85 regions of Russia, and you are well aware that a carefully thought-out and consistent regional policy is essential for our country. Our goal is to make all Russian regions more appealing to investors and boost their competitiveness, to find special growth opportunities for every territory.
There will be major economic hubs and metropolitan areas across the country. Every region must meet today’s requirements in terms of living standards and quality of life.
The Safe and High Quality Roads national project sets the goal of bringing road infrastructure to a new level, improving traffic safety and upgrading passenger transport in Russian cities. The Government has earmarked 100 billion roubles for anticipating the needs of regions that get ahead of schedule in road construction. The quicker these construction projects are completed, the sooner they will produce a multiplier effect with streamlined logistics, new jobs and higher tax proceeds. All this will help us revive the economy and bolster region-to-region ties, and it will have a positive effect on the urban environment and living standards, and drive business development.
We have already adopted targeted development programmes for 10 territories facing the greatest socioeconomic challenges. These regions will receive 5 billion roubles each until 2024 to launch projects that will reinvigorate their economies, and, more importantly, bring about improved living standards and higher household incomes.
Let me say a few words about regional finances. Today, Russian regions can use funds freed-up when restructuring their debts, as well as additional transfers from the federal budget. By the end of the year, it may well be that the deficit, regions’ level of debt, including funds raised on the market, exceeds the indicators set out in their agreements. That said, they have to gradually bring their budgets back to sustainable levels as the situation improves. This is essential in order to maintain low interest rates and attract investment so that the regions can deliver on their mid-term and long-term development objectives.
We have territories that require special attention. Within the next three months, we will approve the National Programme of Socioeconomic Development of the Russian Far East until 2024 and for the Further Period Ending in 2035. In early July, you approved the governmental package of federal laws on supporting entrepreneurial activity in the Russian Arctic. As a result, this region has become, in effect, a huge free economic zone with a broad range of opportunities for investors. The intended tax benefits are unprecedented. A number of non-tax preferences are envisaged, including a free customs zone, a simpler land allocation procedure, and shorter inspection timeframes to be followed by all oversight and control agencies.
We must link all the regions with transport arteries and create a Northern Sea Route infrastructure as an alternative transport corridor. This will make it possible to invite additional freight and to promote socioeconomic development of the regions and this country as a whole.
Apart from this, we will continue implementing the Comprehensive Plan for the Modernisation and Expansion of Railway Infrastructure. Specifically, the Baikal-Amur Railway and the Trans-Siberian Railway are of fundamental importance for the economy of the Russian Far East and Siberia. We will build and modernise the power stations, power transmission lines and trunk oil and gas pipelines in the Russian Far East, Siberia and the Krasnoyarsk Territory.
I am confident that as a result of the measures we have taken, each region of Russia will be able to fully unlock its potential.
Deputies of the State Duma,
I would like to thank you and the members of the Federation Council for your constructive cooperation with the Government and for your support that we constantly feel. This collaboration enabled us to adopt all the decisions in good time during the critical period of our endeavour to combat COVID-19 and to draft the laws on new forms of assistance to the people and crisis-hit industries, with this assistance being channeled where it was needed on a first priority basis.
On 1 July, citizens of Russia endorsed the amendments to the Constitution. This is not only the legal basis for further government work but also an incentive to enhance responsibility of all branches of power and each specific manager. People have voted for the key priorities of the country’s development, which have become our principal objectives.
Members of the Government will report directly to Parliament, which means to your electorate and the country as a whole. It is this system of governance that above all else meets the requirements of dynamic national development and the protection of citizens’ rights.
Yesterday, President Putin signed an executive order on new national development goals for the period until 2030. There are five goals and all of them are geared to addressing the main task of improving the quality of life for everyone in this country. But simultaneously they are aimed at achieving a breakthrough in development.
The adoption of new objectives will call for amending the national projects and strategic planning documents. We intend to complete this work together with you this autumn. When implementing the national projects, we must focus on the results, which directly bear on improving the quality of life of the people, by preserving jobs and increasing incomes, protecting health, creating favourable conditions for business operations and supporting the key economic sectors. In other words, we must focus above all on the practical results, which are important for each and every person. They must be complemented in every project with implementation efficiency indicators. In this way we will be able to understand where we need improvements and which measures are redundant.
We will have to do this within strict limits because of the decreasing budget revenues and different situations in the sectors. Development has been boosted by the coronavirus infection in some areas and has slumped in others. Of course, we not only need to take into account the experience we have accumulated during the implementation of the national projects, but also ensure consistency in the fulfilment of the tasks and goals set out by the President two years ago.
This approach entails the creation of a new system of governance, flexible modern methods, and first of all, clear and permanent feedback from the people.
Colleagues, these past few months were a period of serious trial. The situation is gradually improving now. The people must be able to resume their normal lives as soon as possible, the economy must resume its development, and every citizen of Russia must feel a positive change.
There is hard work ahead for the Government. The tasks we are facing differ dramatically from those of half a year ago. But out basic values and clear priorities have not changed. They have been set out by the President in his Address to the Federal Assembly, and the Government is working in accordance with them and based on the principles and values I mentioned in my opening remarks: serve the people, work as a team, and press ahead for results.
We are doing this so as to be able to improve the quality of life for everyone in our country. Nothing is more important than the welfare, health and development opportunities for the people and a happy future for our children.
Thank you.
