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The agenda focused on Arctic development.

Other issues concerned the implementation of instructions following the Presidential Address to the Federal Assembly.

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President of Russia Vladimir Putin: Good afternoon, colleagues.

As you know, I have signed a list of instructions on the implementation of provisions of the Presidential Address to the Federal Assembly.

Today I would like to talk about the implementation of these plans.

Before we start exchanging opinions and listening to the main report on Arctic development, I would like to say the following.

We launched the Country Doctor programme a while ago, and we financed it, with some of the money coming from the Federal Compulsory Medical Insurance Fund. This is why its participants were exempt from paying personal income tax under Article 217 of the Tax Code.

But now it is being financed from other sources and directly from the federal budget, and the programme participants have to pay personal income tax.

In practice, this means that country doctors and country teachers receive not 1 million rubles but only 870,000 rubles, and rural paramedics get 435,000 rubles instead of 500,000 rubles.

Why do we do this? Let us settle this problem so that people receive the full amount. Either we increase the allocations to compensate for the income tax, or exempt rural professionals from this tax.

I would like Mr Siluanov to begin his report with proposals on this issue.

Finance Minister Anton Siluanov: Mr President, I believe these payments should be exempted from personal income tax so that people fully receive the amounts mentioned in the Address, which is actually being done now, I mean, one million rubles and 500,000 rubles.

Vladimir Putin: Will this apply to both doctors and teachers?

Anton Siluanov: Yes.

Vladimir Putin: Good. Thank you.

Ms Golikova, please, go ahead.

Deputy Prime Minister Tatyana Golikova: Mr President, colleagues.

The Government of the Russian Federation has begun to implement the instructions issued in your Address. I will talk about several social priorities which seem most important today and where we already have a definite positive dynamic.

The first priority is supporting large families. As all of you know, from January 1, 2018, families with an average per capita income below 150 percent of the working-age person’s minimum subsistence wage are entitled to monthly payments in the amount of the minimum subsistence basket after the birth of their first and second child.

In the Address, you proposed to change this threshold, raising the coefficient to 200 percent. This means that the most economically active parents will receive state support. We believe some 770,000 families may be eligible for these benefits, almost 48 percent more than in the old arrangement.

We very much hope that this support policy, along with the tax policies you proposed and the preferential mortgage terms that Mr Siluanov will talk about, will eventually change the situation and influence the demographic behaviour of many families that have been postponing the decision to have their first child.

I would like to note some unfortunate recent statistics: while in 2000, first children born to parents aged 25 or younger accounted for 60 percent of all births, in 2017 (there is no data for 2018 yet) the share was only 45 percent. Unfortunately, the age for first births has shifted to between 26 and 35, which means that the potential of the second and subsequent births is decreasing.

The reasons obviously include the modern development trends: the parents want to complete their education and get a good job. Nevertheless, we very much hope that the measures taken by the state will, as I said, change the demographic behaviour of families.

Last week we sent the amendments to the law on monthly payments to families with children changing the eligibility threshold to all federal executive bodies for approval. And we hope that in the near future this draft law will be submitted to the Government.

According to our estimates, since it is planned to be introduced in 2020, the cost of this policy will be another 16.5 billion rubles in addition to what was previously budgeted under the old arrangement.

Also, all federal executive bodies have already approved a draft executive order implementing another of your demographic package instructions from July 1, 2019, which was subsequently submitted to the Government and will soon be presented to you to sign.

This order raises the monthly payments to a parent (adopter) or guardian (custodian) of a child with a Group I disability or an adult of the same disability group since childhood, to 10,000 rubles from the current 5,500 rubles.

This increase will concern about 465,000 people and, as I said, will take effect from July 1. This change will require estimated additional spending of 13.5 billion rubles in 2019.

The second group of priorities listed in the Address concerns dealing with poverty. Here I must say that the successful work of public authority at all levels, the regional authorities in the first place, in this area determines the resolution, among other things, of the problem that has been marked as the top demographic problem.

Following the meeting in Sochi, Mr Medvedev instructed all regional governors to analyse the structure of people’s monetary incomes in their regions to highlight the priorities we need to specifically focus on.

In the Address, you said that the Government must support the regions by co-financing the mechanism of social contracts which is now used in certain regions but without federal support.

According to recent reports, in 2018, the regions concluded around 115,000 social contracts involving around 320,000 Russian citizens.

I want to add that we really expect that, as we continue our assessment, some nine million people will be covered by these contracts in the next five years.

It is important to note the following. We are not only working towards securing support for governors’ programmes but also modernising this system based on the practical successful experience of this programme being implemented in other countries where social contracts exist as a means of combatting poverty.

There is another sensitive subject that you mentioned. You instructed us to review the indexation of pensions and monthly payments when determining the total amount of pensioners’ financial support and the amount of social bonuses.

We propose to change the existing system. First, we need to establish social bonuses to reach the new subsistence level of pensioners in a specific region. Then pensions will be adjusted for inflation and one-time payments will be made.

As a result, a non-working pensioner’s financial support will be higher than the subsistence level by the indexation amount and the one-time payment in this particular year.

You instructed us to recalculate the payments from January 1, 2019. We expect that the recalculation will affect some 12 percent of non-working pensioners whose pension, coupled with the monthly payments (if there are any, of course), is below the subsistence level in a respective region.

It is planned that, together with regional budgetary funds, we will allocate 18.8 billion rubles for these purposes in 2019. The respective draft law has been approved and reviewed by the Government’s legislative commission. It will shortly be reviewed by the Government and submitted to the parliament.

The third set of issues that I would like to talk about today is linked with healthcare because in your Address you also devoted considerable attention to it and there are many relevant items in the instruction you signed. In today’s report I would like to draw your attention to three topics only.

First is the accessibility of medical care. Today, medical infrastructure has been built in the cities and there is the opportunity of choice whereas, regrettably, rural areas have not been fully covered by accessible medical facilities.

In this context, we are planning to create this infrastructure as part of a national project by the end of 2020. We will focus our efforts on improving the demographic situation in rural areas because the main “contribution” to such statistics is made by the death rate in these areas.

Along with the natural decline in the number of rural residents, their movement to cities has also been recorded. According to tentative information for 2018, the urban population grew by 124,500 people.

As a rule, 99 percent of the outflow consists of young able-bodied people that make up the main asset. While this movement is natural, we understand that it leaves behind in rural areas only elderly people and pensioners that require assistance and support.

In this context, it is important to make medical care accessible not only by establishing hospitals but also by organising mobile teams.

The regions have been allocated funds for the purchase of mobile units that are 100 percent domestically made. These units are designed to provide full-scale medical examination and screening.

As for rural residents that require inpatient examinations, we have earmarked 2.2 billion rubles for the regions in 2019 alone under the Demography Project (a corresponding decision has already been adopted) for the purchase of buses that will take them to urban medical facilities and back.

The second group of healthcare issues concerns periodic medical examinations. As you noted in the Address, we need to continue our dedicated work to reduce mortality from cardiovascular diseases and cancer.

Screenings and preventive treatment are, actually, the pillars of success. Our job is to ensure that in 2019, over 61 million people undergo screening and professional heath assessment, that is, almost three times the 2018 level of 21 million people.

To do this, we need to step up population-wide prevention. What does this mean? This means that all medical institutions should be making efforts to inform the public about the possibility of getting screenings and preventive check-ups.

That is, instead of waiting for people to come in for a check-up, they should be busy attracting patients. A physician should know all the residents of their area and work proactively with them.

I would like to note that all primary medical institutions are to offer screenings if they have the appropriate equipment. Appointments should be available to the public, as you said in your Address, at any convenient time, including evenings and Saturdays.

At the same time, I must point out that regional governors must take appropriate measures, because working late hours and weekends must be compensated accordingly. Actually, you specifically noted this.

We need the regions to take care of this. Therefore, we are now preparing amendments to the Programme of State Guarantees of Free Medical Care, which will soon be considered and adopted by the Government.

I must say that health screening must necessarily include annual, not sporadic, cancer screening – a series of tests and imaging depending on the gender and age of the patient that can detect cancer before symptoms appear.

These most common selective cancer screenings include screening women over 40 for breast cancer, men for prostate cancer, all people after 45 for colorectal cancer and other forms of gastrointestinal cancer, as well as other cancer screenings. I am specifically emphasising the need for cancer screening, including at this meeting, because these types of cancer are the most common.

And, finally, the workforce in the countryside. You have already noted the traditional Country Doctor and Country Paramedic programme. We are currently introducing legislative amendments that would remove age limits under the programme and are also drafting amendments to the law on education in order to provide financial support to rural teachers through such a payment. On a related note, amendments to tax legislation will make it possible to exempt this from income tax.

What will it all come to? Our calculations show that would mean around 11,500 rural doctors, 3,000 paramedics, and, in our estimate, about 5,500 rural teachers that are currently lacking. We hope that this set of measures outlined in the Address plus the steps to be taken by the Government under the national project will yield the intended results.

Vladimir Putin: Do not forget about the need to establish methods for calculating the subsistence level of pensioners in the regions because it is a real mixed bag, with some regions having a lot and others very little.

Tatyana Golikova: This is true.

Mr President, we analysed that situation yesterday with our colleagues from other ministries as part of working on the draft law. The 2018 data are not yet available so we analysed the 2017 data.

In 14 regions of the country the subsistence level is below what is required. It distorts forecasts and leads to imbalances related to the subsequent adjustment from indexation.

Vladimir Putin: All right, thank you.

Mr Siluanov, will you please report on economic issues.

Anton Siluanov: Mr President, the Address outlines four challenges related to increasing economic activity. They all follow up and build on the provisions of May 2018 Executive Order. Let me expand on them.

First is raising labour productivity and creating competitive export-oriented industries. A special national project is in effect regarding labour productivity. By 2024, we are to ensure a five percent annual increase in labour productivity.

Also, necessary conditions will be created for raising labour productivity under the Digital Economy national project. It has to do with establishing a modern regulatory environment.

It includes online identification for people, the possibility of concluding deals electronically, electronic document flow; modern tools for funding projects will be introduced.

As for exports, we also have a special national project and, as part of it, will conclude over 250 agreements with enterprises under the so-called corporate programmes of enhancing competitiveness. What do they involve?

An enterprise assumes commitments to increase exports of its products (these are naturally modern products), while in turn the state will provide financial support to the enterprise if it fulfils its commitments.

We are seriously working on exports in the agriculture industry. The measures to increase exports of agricultural produce will be continued and expanded. These exports have been on the upsurge in the past few years and the programme provides for additional funds for these purposes.

In addition, fulfilling the task set in the Address, we will create a protected brand of domestic ‘green’ agricultural products. Starting on January 1 of next year, producers of organic products will be able to label them as such. A special label will be also introduced to mark these products as eco-friendly and ‘green’.

Exports of services play an important role in expanding exports. In the near future, we plan to simplify visa procedures for foreign citizens on certain tourist trips, primarily for medical, educational, business and cultural purposes.

We will also expand the use of e-visas. You have issued instructions to this effect and we will start fulfilling them this year as part of our plans to increase the export of services.

The second task of the Address is to increase the quantity and quality of investment in fixed capital. There are several aspects to this.

First, we are going to increase private investment. I am referring to systematic work on improving the business climate by reducing administrative costs. You have also set the task of cancelling all excessive and obsolete requirements that stand in the way of business. We have already started this work.

We have launched a mechanism to transform the business climate, notably, reducing the time it takes to get connected to utility grids, transitioning to state and municipal e-services in urban development, and endorsing and simplifying procedures involved in international trade.

The third challenge is eliminating infrastructure constraints on economic development and on increasing the potential of our regions. We are also pursuing the 13^th project outlined in the May 2018 Executive Order. It deals with main infrastructure and the Safe and High-Quality Roads national project.

We will see new projects connecting different regions of the Russian Federation as early as this year. They include infrastructure upgrades at airports in Novosibirsk, Perm, Chelyabinsk, Khabarovsk and Blagoveshchensk. The changes will begin this year, overall 27 airports are scheduled for upgrades.

In addition, a new project will be launched to build port infrastructure and to increase agricultural exports through the ports of the Sea of Azov and Black Sea, Baltic Sea, and the waters of the Russian Far East.

Another significant project is building the Northern Latitudinal Railway which will ensure more shipments of petrochemicals and gas chemical products.

Building transit motorways. It is all covered by funding as part of the comprehensive infrastructure development projects and the Safe and High-Quality Roads project.

The fourth challenge is training modern workforce and creating a modern science and technology base. This task will be addressed as part of the Science national project.

At least 15 world-class science and education centres are to be set up by integrating universities and research organisations with entities operating in the real economy.

Apart from that, under the Education project we will allocate additional resource to modernise secondary vocational education including re-equipping vocational schools with up-to-date equipment.

Regarding other instructions given to the Government in the Address. In the near future, Mr President, draft laws will be submitted on amendments to tax legislation.

Also, a draft law will be submitted to parliament shortly on expanding access to mortgage loans.

Adjustments have been prepared for the mortgage programme for families with two or more children to extend the discount interest rate for the whole loan period.

Additionally, a five percent mortgage rate is proposed for families with children in the regions of the Far Eastern Federal District in contrast to the six percent rate across Russia.

Families that service a mortgage will receive 450,000 rubles if they have a third and subsequent child; an instruction has been issued to pay these benefits from January 1. An estimated 200,000 families will be able to take advantage of this until 2024.

If we add up, as you said, the maternity capital and this new benefit, with the tax deductions for the property the family currently owns, which are provided for under the current legislation, these families can receive government support worth about 1 million rubles.

This amounts to nearly half the average cost of an apartment in the Russian Federation – except Moscow and St Petersburg, of course. These families will have half the cost of their apartments compensated.

Mr President, we have the following thoughts on achieving the goal you have set – the development of individual housing construction. Families with two, three or more children not having their own housing should be given the right to use their state benefits (maternity capital, plus the 450,000 ruble deduction) for new individual housing construction.

Why are banks not particularly interested in financing mortgage programmes for individual housing construction? Because there is no collateral. Well, these amounts – 450,000 plus 450,000 (900,000 rubles) – are good collateral for banks so that they can provide loans for the construction of new houses in the form of individual housing construction.

Vladimir Putin: Give them land. Let them have ownership of the land.

Anton Siluanov: Land can also be a collateral. The money together with the land is a good amount to put up for a loan.

As for the mortgage holidays for borrowers who are in a difficult situation, like those who lost jobs, this problem will be handled as part of the standard for responsible mortgage lending; this standard we developed is included in the Mortgage federal project.

We have agreed with the Bank of Russia that a draft law will be prepared granting a deferment to borrowers finding themselves in a difficult financial situation.

Mr President, we began the preparation of all the necessary decisions immediately after the Address. We have estimated the funding needed to achieve the goals that were set in the Address, and it is more than 900 billion rubles for the period from 2019 to 2024.

We will allocate the required amounts when adjusting the budget for this year. We will also find the necessary resources for this while drafting the budgets for the upcoming three-year period.

We are working together with members of both houses of parliament. While drafting proposals, we will now be even more firm on redistributing budget allocations, on budget discipline, so as to marshal all the resources available in the budget to the maximum to fulfil the goals set in the Executive Order and the Presidential Address.

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