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These documents outline the main national development priorities for the coming years, particularly the long-term state economic and social policy, reform of the Armed Forces, and measures for the implementation of foreign and demographic policy.

The meeting was attended by Cabinet ministers, the senior staff of the Presidential Executive Office and the presidential plenipotentiary envoys to the federal districts.

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Speech at meeting on implementation of presidential executive orders of May 7, 2012

President of Russia Vladimir Putin: Good afternoon, colleagues,

One year ago today we presented a transformation strategy to society, outlined the targets to be achieved by 2018 and planned the specific steps to be taken to reach those targets, thus improving the quality of life and making the economy more efficient.

I stress that the overall objective of this work is to create new and higher standard of living for the citizens of the Russian Federation, primarily by substantially improving the efficiency of public administration and the state’s performance.

I want to emphasise this especially, colleagues. The means by which we will achieve these goals are a question of principle. First of all, I repeat, by more efficient public administration and improved performance of the state, as well as the growth of investment in the economy.

Particular attention was paid to the development of education and healthcare, and the housing and utilities issues, which are the sectors that cause the greatest concern for our citizens.

The public supported our action plan, which will ensure stable national development. All of the programme’s provisions were stated in the presidential executive orders that were signed exactly one year ago, on May 7, 2012. That is why we have met here today. I propose to discuss in detail the results we have achieved, the problems and why they have not been resolved so far, and the areas in which we are lagging behind.

I also believe it crucial to identify the main challenges for the coming year in all key areas of our development. I stress that we have set very ambitious objectives, and we will be working to reach them in very difficult conditions. The situation in the global economy is highly complicated, and this affects the economic growth rate in our country.

Nevertheless, I am confident that the objectives we have set are absolutely realistic despite all the current problems and challenges. We must not use the complex, objective circumstances as an excuse. We must carry out all the measures we have planned. Expectations in society are very high, as the recent Direct Line session clearly demonstrated.

Naturally, we needed the time to form the Government and to set this very complex mechanism in motion. But in order for the goals we have set ourselves to be achieved, we must work conscientiously already now.

I want to say straight away that we have achieved some results. Over the past year we managed to break the deadlock on many chronic problems. The demographic indicators remain good. We are increasing support to large families. Thus, this year we launched a completely new, complicated and financially demanding programme of assistance to large families in more than 60 regions of the Russian Federation. We have started to pay benefits to families after the birth of the third child. I want to emphasise that this is a new programme. In 50 regions with a difficult demographic situation benefits are subsidised by the federal budget, while 14 regions use their own funds to pay benefits for the third child.

Next. We have increased support for university students, the first- and second-year students in need who achieve top marks. They are already receiving an increased stipend in the amount of a subsistence minimum. Let me remind you, this measure was also initiated a year ago in the course of direct discussions with the public.

Real incomes are not growing as fast as we would like, but there is still growth, including among university faculty members and public sector employees. There are still many problems, but the fact remains that the average salary for university staff in March 2013 exceeded the average regional wage in 65 Russian regions. In 34 regions, university salaries exceed the average wage in the region’s economy by 125%.

Last year, we were able to bring teachers' salaries up to the regional average in a number of regions. It is important that the teaching profession is again becoming prestigious and highly respected in our society. As a result, professional standards are also growing. In many cities competition for jobs at schools is very tough and there are many applicants for each vacancy. This is definitely a good indicator.

It is clear that not everything is going smoothly; in some areas there is inertia, lack of commitment and sometimes inability to work as hard and make the right decisions. Often the salary increases are not accompanied by increased quality of service, and structural changes within sectors are slow. Public sector institutions often continue to pay salaries simply for the fact of being present in the workplace.

We must bear in mind that the key is not the amount of resources we allocate (although this is very important as well since not a single issue can be resolved without funding and it is vital to spend each ruble frugally); what is even more important is the effectiveness of the measures taken and their focus on concrete results. Otherwise the funding we set aside for the reforms will disappear into the black hole, as they say, and there will no clear benefit for the people.

Let me give you a few examples. Over the past eight years funding for healthcare, for example, has increased almost four times over. However, the most important steps (the newest most important steps) that we have talked about many times, namely introducing standards and procedures governing the provision of medical assistance, were not completed within the allotted timeframe, or at least not in full. And this directly affected the quality of work done at healthcare facilities, increased confusion as to what is absolutely free of charge, and what may fall into a different category. Naturally, it also affected the salaries of healthcare workers. Even though salaries in the industry are generally higher than, say, those in secondary education, many, many problems remain. I will talk more about this later.

I would draw your attention to the fact that we can no longer postpone structural reforms; we risk missing a window of opportunity. Therefore I believe that this year’s most important priority should be the practical introduction of new working principles into public institutions.

At the same time I want to warn you once again about mechanical, hastily-made decisions. This first and foremost applies to the fate of ungraded rural schools, rural medical assistance centres, maternity centres, and hospitals. We must be more careful when approaching the reorganisation of educational institutions, including those of higher education.

In general, the public sector needs to cooperate closely with the professional community and Russian citizens. Of course, at first glance what I just said might seem to be opposing and irreconcilable tasks, but this is not the case. It is not the case!

When we talk about network restructuring, for example, it is more difficult to create interdistrict, interregional hospitals, than it is to shut down a rural medical assistance centre, where the nearest medical facility is 200–250 kilometres away, off roads. People keep quiet there; they will not say anything. However, the regional authorities and relevant federal bodies must know about this.

We must look for additional savings by increasing labour productivity as well as reducing costs and inefficient, often frankly frivolous spending.

In this connection I would like to point out the following. For a long time remuneration for a manager’s work did not depend on the quality of work done at a public institution he or she headed. Along with this it often exceeded employee salaries many times over, and without any foundation whatsoever.

To a certain extent this was our mistake too: we relied on the belief that everything would right itself within the groups themselves. Nothing has righted itself on its own. Now we must make other decisions and directors’ salaries are directly linked to the average salary paid out in their institution. This is the first point.

The second: as of this year, the heads of public institutions must report their income and those of their families. Let me warn you that these reports must not become their own kind of sham.

And there’s more: we have already held meetings about regional budgets, but regions are still complaining about how difficult it is to meet objectives. Unfortunately, timely, coordinated actions and necessary methodological support from federal departments and agencies is often simply absent.

For example, what happened to additional payments for primary healthcare professionals and those providing emergency services? Those famous 5,000, 10,000, 3,000 and 6,000 rubles [from $97 to $321]. These obligations were transferred to the regional level. At one point we introduced this from the federal level; I introduced it, I remember it well. It was a very correct and timely measure.

Now we agreed that we will transfer responsibility for these payments to the regional level. Did we allocate the funds? Yes, we did. Did we keep our promise to allocate them? Yes, we did. Did these funds reach the regions through the compulsory health insurance system? Yes, they did. And yet they did not reach healthcare workers themselves. Simply because the relevant mechanism did not operate in a correct and timely fashion.

I remember very well our conversations at the meetings on this subject, when colleagues urged that we transfer the money to them, that this should and must be a regional commitment, and one that they would fulfil, because after all we were sending the money. I would ask you to remember what I said then. I said: “They will not pay, there will be failures.” And I got to hear: “No, they will pay. We will “tag” the money.” Did they tag it? Who needs that ‘tag’? Where is the money?

You know, you can argue and swear as much as you like about the so-called “manual steering method”. Fine, let’s not do things manually. Let’s do them systematically, but then we have to introduce a system that works effectively.

Another issue: it is not entirely clear whether the financial contributions to the regional budgets are sufficient. How can the regions be expected to tackle the tasks they have been given? At the same time, the cash flow is clearly not what it should be: out of the 192 billion rubles of additional budget allocations for specific activities directly arising from the executive orders, only 17 billion have been paid out in the 1^st quarter. That is less than 10%. I propose that we talk about this, too. What is going on here? Are we going to put everything off until the end of the year again? Well, I can guess what the result will be, and you know it, too.

Colleagues, I will repeat: today the quality and effectiveness of our actions come to the fore, so we cannot afford to re-examine the decisions and documents that have already been adopted, to approach our tasks formally, just to have something to report on the execution of orders or to submit another piece of paper. The reports are not the point here, and I’ll come back to this later.

Let me give you a specific example. One of the strategic challenges arising from the executive orders is the socioeconomic development of the Far East and the Trans-Baikal Territory. The relevant state programme has been approved and adopted, but the funding for the programme has not been provided.

This programme requires 3.8 trillion rubles of federal funds – a huge amount – by 2025, of which the Finance Ministry has confirmed only 296 billion for the period to 2020. The question is, why did we adopt this document if it is not clear how we are going to finance its implementation? Just for the sake of appearances?

I understand that we can talk about some additional revenues that will come in the future. Why are we kidding ourselves? What revenues? How much will there be? And to say that this is a rough programme means that it is not a programme but a declaration of intent. We are talking about hundreds of billions of rubles from the budget.

Recently we analysed the results of another such kitchen-table effort, the programme for relocating citizens from unfit housing. Everyone could see from the word go that it clearly missed the mark with regard to the fairness principle. Nevertheless, we adopted the programme, forced it on the regions and a month later came to the conclusion that it was impossible to implement. Why adopt such documents? We are deceiving ourselves: there are no results and we discredit our own efforts.

The same superficial approach was adopted on the issue of allocating land plots to large families. According to the regions’ reports, over 54,000 large families received land plots last year. This is a very important initiative but what do we have in practice?

Families are given land plots in inconvenient locations, the property registration procedure, and issuance of building permits is clearly overly bureaucratic. As a result, families get the full measure of someone's incompetence and irresponsibility.

I have already issued instructions to come up with another option for helping large families improve their housing conditions. We need effective and practical solutions, rather than pieces of paper and reports, as I said.

What else do I consider crucially important? This year the focus of these executive orders’ implementation is largely shifting to the regions. It is there, on the ground, as they say, that we must achieve visible, socially-significant results. We are in the process of approving regional “roadmaps” of reforms in key areas. Unfortunately, I must once again point out that much is being done just to check the box. I can relate a specific example of the careless attitude towards developing these roadmaps.

I recently looked at a document on the development of social services in one Russian region. The main text states that 25 percent of all residents who need a place in permanent regional social service institutions cannot get one. And this refers primarily to which categories of citizens? We know that these are disabled, solitary or elderly people. But the tables with various indicators show that this year the percentage of the region’s population receiving social services amounted to 97.9 percent.

So the problem exists, but regional documents act as if it does not. Who needs such “roadmap”? What is its point? And why did the Ministry of Labour and Social Protection agree to it? In general, in their roadmaps the vast majority of regions promised to reach almost 100 percent of all target indicators already in 2013 to 2015. And they promised to achieve them evenly, from year to year. Along with this, some of them were not able to cope with the tasks at hand already in 2012.

By the way, I also believe that we must act year by year. We recently met and everyone, or in any case the bulk of the participants, agreed with this point. We need to move forward evenly, and not drive something into a dead end, otherwise we will not be able to cope with all the problems at the end of the road.

Thus, aware of our meeting today, at the end of last year and in the first quarter of this year, various regions began to throw money at problems, including in order to be able to report on salary increases in the education sector.

It is clear that such actions do not resolve the problems that concern our citizens. On the contrary, these approaches can also trigger negative reactions. This has already happened, and I know and remember it well: by taking some action people fix the figures, raise salaries, and then slash them at the end of the year. And I know such practices. But in the end they will discredit all the work we have undertaken together.

We must admit that federal ministries and departments often do actually force regions to resort to various manipulations with current and test benchmarks. I have already talked about this in relation to the programme for relocating people from unfit housing. Because one federal agency needs a nice report, while another receives subsidies and more from the federal budget. And they simply say to the regions: if you don’t sign here there will be no subsidies! Well, do we not know this? We do! I want to stress once again that we will judge the implementation of the executive orders not on paper, but according to whether or not they have improved the quality of people’s lives.

Next, I have already said today that we have had to implement the executive orders in difficult macroeconomic conditions. For that reason the significance of each measure increases based on its potential to promote economic growth (this is a fundamental issue), to enhance country’s productive capacity, to improve the investment climate, and to create jobs. And in this respect nothing is too small! Together we have come back to these issues many, many times, and everyone agrees that this is a crucial point.

What happens? For example, the mechanism of state guarantees for loans to medium-sized manufacturing businesses – an extremely important measure – does not work. Incidentally, the funds allocated for this purpose, 20 billion rubles [$650 million], are not huge. But nevertheless budgetary funds have been allocated and they remain unused. And to receive these guarantees – I looked at the relevant rules yesterday, while preparing for our meeting today – to get these guarantees is almost impossible, just try and do it yourself. It is impossible. So the money is just collecting dust.

This is true even though the mechanism for providing state guarantees should have been approved by the Government before November 1, 2012. What is happening? Against the backdrop of a difficult global economic situation, we are looking together for new incentives to support growth. By the way, we do find them. However, earlier decisions taken and money allocated (and we did find some money – it was difficult, but the Government did so nevertheless) with the goal of supporting development are either functioning at limited capacity or not at all.

Another example. To stimulate the growth of housing construction, to reduce the developers’ costs, and, therefore, property prices, the Government was instructed to establish an exhaustive list of administrative procedures in the field of construction by December 2012. An exhaustive list of procedures.

The Government has drafted such a list, which is certainly good. By the way, it was not an easy job. However, in October, they suddenly remembered that it was necessary to introduce amendments to the relevant law granting the Government the right to adopt such a list. Everything is clear here: we must act and move forward.

Colleagues, since last October you have been unable to introduce the corresponding amendments to the State Duma. As a result, your exhaustive list of administrative procedures in construction has remained just a project. You did a huge job, you made a very necessary and positive step, but now you must bring it to conclusion and launch this mechanism, because otherwise it will remain on paper, a pointless effort.

A few words about the work on the implementation of the roadmaps to improve the business climate. What is striking here? After all, we all agree that this is also an extremely important job. We all agree, without exception: the expert community, the Government and the Executive Office – everyone is talking about it.

What do I want to highlight here? We have made some good progress in a number of areas. That is a fact. However, far from all of the measures stipulated by the roadmaps are being implemented in a timely manner. Let me stress that we adopted the roadmaps, including the one on the promotion of competition, in order to execute them and not just to report that they had been adopted. What is the use of adopting them if they are not being implemented?

Furthermore, the Government is not in a hurry to approve the new roadmaps on such issues as the quality of state regulation and the access of small and medium-sized businesses to state procurement orders. We have been talking about it for a long time and everybody, I’ll repeat this for the third time, is thrilled about this crucial area of our work.

The roadmaps on enhancing the quality of state regulation and on improving the access of small and medium-sized businesses to the procurement orders of infrastructure monopolies and state-owned companies, which were approved by the Supervisory Board of the Agency for Strategic Initiatives on November 21, 2012, have still not been adopted by the Government. All of these roadmaps were not plucked out of the air. Anyway, the point is not that the Agency for Strategic Initiatives, which, by the way, has been very efficient, has approved it. That is not what I am talking about.

I am talking about the business community and our joint efforts to tackle these challenges. We all recognise that this is a crucial area of our work together. And these roadmaps were not plucked out of the air. They are, in fact, the product of your own efforts because it was all done with the participation of the business community, experts and the Government, the respective deputy prime ministers and ministers.

There were no objections. That is, there were objections during the discussion, but we all agreed in the end. Yet no progress has been made because the roadmaps have not been adopted since last autumn. Why not? We argued until we were hoarse, we came to agreement and signed the documents – and then proceeded to shelve them.

I want us all to understand clearly that we need high growth and entrepreneurial activity. Therefore, under no circumstances must we limit our efforts to cosmetic measures. Incidentally, the international expert community and our experts have pointed out that we are moving forward but very timidly, to say the least.

I believe that the stated goal of creating a competitive, comfortable business environment can be achieved more quickly, and it is our duty to achieve it faster in the interests of national development. I ask the Government to seriously speed up the implementation of these roadmaps.

Colleagues, the most important condition for the success of our work is engaging our society and citizens in the reform process. We must be sure to interact with people, explain the logic behind and meaning of our actions, and listen to the opinions of civil society.

In this connection, I will talk about the strategy for developing our pension system. Yesterday evening we talked about this with Mr Medvedev in some detail, discussed this sensitive issue that concerns everyone without exception. Over several successive months we’ve had a difficult, very sharp and hard discussion. Along with this the Government has not yet come up with a pension formula that is clearly understood by our people. Either this formula is ready or it is not. Colleagues say that it is, but if so then let’s have the Government pass it, submit it to the Duma, and discuss it with people. This can’t be done behind closed doors, and shouldn’t be either. Why? It is necessary that people understand what is happening, what is on offer.

Take a look at what’s going on in Europe. In Portugal they are raising the retirement age again, this time to 66. And in most European countries there is no gender difference for the retirement age. We have repeatedly stated that we consider it inappropriate to raise the retirement age in Russia, and we will not do so. Because our life expectancy is less than Europe’s, to put it mildly.

But we still have to offer clear and understandable solutions to problems, and problems do exist. We know what our colleagues from the so-called liberal expert community suggest. They say you can’t do it without raising the retirement age, and the sooner you do that, the better. But this is a very acute social and economic problem. We say no, we will not, we believe we can do things differently. How? What is the solution then?

Once again I want to say that as a result citizens still do not understand how their future pension will be calculated, on what it will depend. I would ask again that you conduct a broad public discussion on this issue before autumn.

Another important point is that we have given people the right to choose whether to direct four percent of their insurance premiums to their insurance, or to the funded part of their pension. They must make this decision by the end of December this year. We are in May, and we have yet to see active educational outreach to Russian society, although the relevant instructions have been given.

We promised citizens that they will have time to make an informed choice between funded and insured pension schemes. They should have a clear understanding of exactly how pensions are calculated in each of these schemes. I would ask you to speed up your work.

I would draw your attention to the fact that we still have a great deal of work to do to increase the transparency of government, and to expand the range of ways that citizens can influence authorities’ work. We are definitely going to move and we must move in this direction (we chose it ourselves). Of course the efforts the Government has made with regards to increasing the transparency of its work must and shall be supported.

The system for disclosing information about draft laws must be fully functional, as well as the Russian Public Initiative web portal. The relevant legal framework has been adopted. The site has been online since April 2, and citizens have begun making suggestions very actively. At present, more than 900 such initiatives have been made.

However (once again I have to begin a sentence with “however”), the Government has not yet formed an expert group to consider these proposals. I draw your attention to the fact that the public’s assessment of our actions is essential. Let’s start our discussion.

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President of Russia Vladimir Putin: Colleagues,

We had a very important, timely and rather frank conversation today. I want to stress again that we can only properly get through this highly difficult period, manage the trials faced by the entire world and the global economy, and resolve difficult social issues that are essential to our country by maintaining a momentum of development, increasing the efficiency of our efforts.

As I said earlier, the quality of our decisions and the efficacy of our governance are key necessities in today’s world. We should fully eliminate all forms of disorderliness, lack of discioline, inefficacy and bureaucratic delays. I expect full composure and responsibility from all of you. It is imperative to act more quickly and more efficiently – this is true for the Cabinet and for Russia’s regions.

It is unacceptable when the most important steps are hindered by somebody’s unwillingness to take personal responsibility, when programmes tumble because of weak cooperation between ministries and agencies or due to a lack of clear recommendations to regional authorities on the part of the federal government. To conclude, I believe the following matters must be taken into account.

First of all, we always have to remember that we are working for people, not for the sake of reports. The main results of the work should be real changes that improve people’s lives, new quality of the economy and the social services. The statistics and accountability game does not just discredit individual managers and officials, regardless of how high their ranks are, but all of our work and all of our efforts as well.

Second, we cannot lose sight of the overall logic of systemic transformations in the economy and the social sector when dealing with the details and individual events, including the vector predetermined within the framework of already implemented priority national projects and projects to modernise education and healthcare in the Russian Federation’s regions.

Working under the “add a little money here, patch things up there” strategy will essentially fail to improve anything. We need structural transformations. Pouring a little money here and there without structural improvements is a road to nowhere. And you probably know this; indeed, you certainly do.

Today, during our discussion, this was confirmed yet again. Systemic transformations are to be conducted right now, without leaving anything for later. Otherwise, we cannot resolve the problems before us, that would simply be impossible.

And finally, let me draw your attention to an important point we already discussed today as well. The implementation of executive orders is not some sort of addendum to the current goals of the Cabinet, federal agencies and regional authorities. I want to warn you against this kind of permissive, superficial approach. Executive orders are the strategic foundation for the work of our entire system of government. I hope that all of us together, and myself in particular, will monitor the fulfilment of the set objectives in the strictest possible manner.

Friends, we are facing some genuinely major challenges and it is indeed difficult to fulfil them as they require major efforts and the mobilisation of all our resources. But I am confident and will repeat again that if we organise our work adequately, all these objectives are entirely realistic.

The executive orders of May 2012 outlined 6-year plans. A year has passed, and only five years remain. It is true that many projects have been launched. But frankly, so far, there are very few visible changes. We all must ensure tangible progress every year; every year we must see forward movement, advances toward the ultimate goals, hence we do not have the right to simply claim that since these objectives are long-term in essence, one can see no improvements at this stage, or can only see little improvements, but that this is normal for long-term programmes. I want to tell you clearly: this approach is wrong.

If we fall behind on addressing some problems, we will end up failing all or most undertakings while our people expect visible results and changes for the better in healthcare, education and other key areas. So we will judge the competence of the Cabinet and the regional authorities based on these changes, or lack thereof.

Let me stress that if we want to fulfil the objectives we have set, then we must constantly move toward this goal every year. The work is underway, but I must say that today, few people in our society are aware of how it is progressing while the essence and substance of this kind of work should be clear not just to the Government, ministries, agencies, regional authorities and the President, but also to the people and to society overall.

Based on the outcomes from the first year of implementing the executive orders, we can see there is some progress. But purely bureaucratic responsibility does not work well. I believe that each of us must accept public, political, personal responsibility, including each member of the Cabinet of the Russian Federation. We are to remember that every ministry and every agency has its own development plans so I am asking you to coordinate these development plans with the objectives laid out in the President of the Russian Federation’s executive orders of May 2012, and make the corresponding adjustments for the next five year period and for each one of these years.

Each minister must see and understand what specifically he or she is going to do over the course of the year aiming to implement these executive orders, what results he or she will reach and state it publicly, so that his or her actions and objectives for the year become public knowledge.

I ask you to draft such plans within one month, to make them public and submit them to me. Let me repeat it must be done within one month. At the end of this year, I will meet with each of you personally to discuss the results of your work over the year, and I will publicly hear reports on the results achieved.

Colleagues, I am asking you to take the issues raised at today’s meeting very seriously and I count on our joint, effective work.

Thank you.