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President Putin: I would like to turn to an issue that began before the New Year and has gone into effect since January 1, and that is the question of benefits made in the form of cash payments and compensation.

I think it would be best to examine it from two points of view. First, the reasons for taking this decision and second, how it is being implemented in practice. We have already spoken a lot about the reasons for this decision, but I would nonetheless like to say a few words first and then we can examine present developments.

A system of benefits existed in the Soviet Union and worked effectively overall for that time and within that system. At the same time, I think we all recall very well that only a relatively small overall share of the Soviet population was entitled to these benefits. For the most part this included veterans and disabled people, that is to say, people who took part in the Great Patriotic War and a few other groups of people, which, I repeat, formed only a relatively small share of the Soviet Union’s overall population.

Economic and social problems began emerging following the breakup of the Soviet Union. We all know the scale these problems took. Unfortunately, at the very moment the country began facing these problems decisions were taken to increase the number of various benefits. The state was in essence covering up its economic and social failures by declaring that it would accord this or that benefit, although these declared commitments were not in fact fulfilled, either in full or in part.

Incidentally, the government should have been prepared today for criticism from parties on both the right and the left, because it was precisely these parties that at that time on the one hand created the oligarchic system of capitalism in Russia and let the country’s national wealth be pillaged, and, on the other hand, took or encouraged the adoption of these decisions that were popular but completely unable to be fulfilled. We know very well what consequences this all had in practice. According to the general figures, under the laws that were in force until just recently, more than half of the total Russian population was entitled to benefits. What did this mean? This meant that the other, lesser, half, was expected to pay for it all.

What did this mean in practice for specific sectors? Let’s take as essential a sector as transport. In some regions and in the big cities the number of people entitled to free public transport exceeded the number of people who had to pay for public transport. This was obviously reflected in the state of public transport services and also led to big price rises. In other words, people had to pay more while at the same time the quality of service fell, which aroused dissatisfaction among both those entitled to free transport and those who were in effect paying for themselves and for the various beneficiaries. All kinds of diverse state funds, subsidies and other allocations paid by the budgets at different levels did not and could not improve the situation, for a start because they were completely insufficient and secondly, because, as is always the case in such situations, they were spent highly ineffectively.

So, the reasons for the decisions taken by the State Duma and the government are clear. The question is one of how these decisions are carried out in practice. It seems to me, and I hope you will agree with me, that the government and the regional authorities have not completely fulfilled the task that we had spoken about, namely that of ensuring that decisions made would not worsen the situation of people who do need some help from the state.

Today, of course, the situation is no longer what it was in the mid-1990s when wages were not paid for months and pensions were sometimes not paid for years in some parts of the country. As for various benefits, people did not see them for years at a time. The situation today has changed but there are still a lot of people who need support from the state. We said that the decisions taken by the parliament and the government must be implemented in such a way as to not leave these needy people worse off.

Have we accomplished this objective? In many respects no, I think. This suggests that these issues were not worked through in full and from every point of view. But the decisions have already been taken. These decisions are contained in the laws passed by the State Duma, and they do not go against the principles of these laws, nor against the principles these reforms propose, and at the same time they preserve social justice. You know that some of these decisions have already been formulated in some regions and in some places are already being implemented.

Coming back to transport, the most sensitive issue, one acceptable solution would be to provide transport tickets for a sum not exceeding the amount of benefit payments received. This would be the simplest and most clear solution. People entitled to these benefit payments could then decide for themselves whether they want to use this money to buy a monthly public transport ticket, or whether they would rather keep the money for some other purpose if they don’t use public transport or don’t use it very often.

Of course, the question arises as to what to do with people who, under the law, are covered by the federal budget. I think it would be perfectly reasonable for the government to resolve this problem through talks with the regions and to compensate the regions for the corresponding losses.

But that is not yet everything. All pensioners, even those not formally entitled to any particular benefits, were entitled to free public transportation. I think that we must also ensure their situation is not worsened during the transition period. In this respect I think that the decision discussed by the government and the State Duma to increase old-age pensions by 100 roubles is insufficient, all the more so as the increase is planned as from April 1. I think it would be better to make the increase as from March 1, rather than April 1, and at minimum to double the planned amount so that pensions will rise by at least 200 roubles and perhaps a little more in order to at least settle the public transport problem.

Now I would like to hear your opinions on this point and I would also like to discuss other related social issues such as provision of medicines, use of suburban transport and healthcare at sanatoriums and health resorts.