RUSSIA, July 4 - The meeting participants discussed various aspects of cooperation between the Government and the Federation Council in the lawmaking process.

Mikhail Mishustin’s opening remarks 

Federation Council Speaker Valentina Matvienko’s remarks

Mikhail Mishustin’s remarks

Excerpts from the transcript:

Mikhail Mishustin: Good afternoon, colleagues.

First of all, Ms Matvienko, I would like to congratulate you and your colleagues on your professional holiday, which was celebrated at the end of June: International Day of Parliamentarism. And happy anniversary. This December will mark the 30^th anniversary of the first parliamentary election in Russia.

All this time, the Federation Council has consistently acted in the interests of Russia’s development. Above all, the senators help create a clear legal framework that would become the foundation for fulfilling social obligations and make it possible to build an economy that is resistant to external shocks. You also pay great attention to preserving our cultural, historical and spiritual values. The rich cultural heritage and diversity of our peoples are integrated in the work of the Federation Council.

As the President said, vast and invaluable state-building experience has been accumulated over these three decades, and the foundations of Russian legislation as a democratic, legal and social state have been formed.

The Government and the Federation Council have created a good tradition: to hold such meetings as today. Ms Matvienko, you and I have already discussed this. We have talked about all acute issues, including the implementation of the adopted decisions as well as those that are still in progress. And, of course, we consider all the proposals we receive from the parliamentarians and discuss how to organise our work more effectively.

I would like to recall that, following our previous conversation, we issued a number of instructions, and that 20 of them have been fulfilled completely. We are monitoring two other instructions that remain to be implemented.

We can also see the same approach while drafting new regulatory documents. The Government has reviewed over 130 of your initiatives and motions. In fact, we have reviewed and approved most of them.

At the same time, we have supported virtually all socially significant Federation Council bills.

Since early 2023, the President has signed 53 laws drafted by you or with your direct involvement.

This includes documents that will make it possible to establish a judicial system in the four new regions of the Russian Federation and guarantee compliance with the rights of our citizens in these territories.

I would like to dwell separately on motions and initiatives for upholding the rights of service personnel involved in the special military operation. You also helped draft them. These laws provide state support not only to our defenders, but also, importantly, to their families living in various regions all over Russia. You have accomplished a tremendous amount of work, and I would like to sincerely thank you and everyone taking part in this process.

We approved comprehensive legislation to regulate the activities of volunteers, including ensuring their social protection, as well as payments for high-risk activities endangering their life and health and some other guarantees.

Here is another highly important issue, specifically, support for families with children. Many initiatives have been submitted in this connection. A law, approved by the President, bans the conversion of children’s health institutions, and expressly forbids any changes in the status of their respective land plots and the misuse of such land plots. I believe that this is a key aspect. Ms Matvienko, the approved bill addresses your concerns.

From 1 September, we are exempting bus drivers who take children to schools and on guided tours, etc. from paying road tolls.

The Federation Council drafted both legislative motions with the Government’s active involvement.

I would also like to note the joint efforts of senators and deputies to review a package of bills that stipulates tougher penalties for destroying rare and endangered animals and plants.

These and many other highly important decisions are already becoming part of our everyday life, thanks to your energy, professionalism, and ability to find a balance between the interests of federal ministries and agencies and the distinctive features of each region.  

I believe it is the right thing to continue to synchronise our cooperation in preparing priority decisions. The earlier we are able to exchange legislative plans, the more accurately and effectively these decisions will be used. And “government hour” meetings will be held more effectively, while implementation will be of higher quality.

We are counting on the senators to interact and cooperate with my deputies more actively as well. Each of them, who supervises federal districts, will always be ready to listen and work together on what needs to be done. Let me remind you that there are four key parameters that the Deputy Prime Ministers must monitor: GRP (gross regional product) growth, the number of jobs created in the regions, investment, and personal income. These are probably the most important parameters. I think you will agree with this.

This, by the way, is the feedback that the President is always telling us about.

Valentina Matviyenko: Mr Mishustin, members of the Government. First of all, on behalf of the members of the Council of the Chamber of Regions, I would like to thank you for this already traditional meeting with you, the members of the Government. These meetings are always effective and efficient. You have already noted that almost 100 percent of the assignments that you gave after our last meeting were fulfilled, two of them are left, but for objective reasons, they need further work. I would also like to say, and this is not a figure of speech, but rather an objective point: the Federation Council and the Government have established constructive cooperation and mutual understanding. We are in constant working contact; we really work as a team under the leadership of our President.

I would like to note that we have worked out the following formats: government business hours, open dialogues with ministers, and meetings with state secretaries. Members of the Government always prepare for these events very seriously. They are always professional and substantive. And the members of the Federation Council note the high professional level of the members of the Government, whatever the format.

Naturally, we are all aware of the times we live in. Coordinated, systematic and professional actions by the Government have helped us cope with very serious challenges that I am sure would have been insurmountable for most countries. We also appreciate the fact that the Government in general and you, Mr Mishustin, are always very attentive to the proposals of the Federation Council, listening to them, to the senators' position, and thus to the voice of the regions, because all of the senators reflect the issues that concern people in the regions.

I am particularly thankful to Mr Grigorenko and Mr Zhivulin (Governmental Plenipotentiary Representative to the Federation Council) for their constant support and prompt response to any issues that arise. And, of course, we have today a good opportunity to exchange opinions on the current issues of domestic policy and the issues that concern the senators.

I will touch upon several issues, and my colleagues will add more later. The Russian Government pays a great deal of attention to supporting industrial production, including Russian automobile manufacturers. The support measures include the resumption of the concessional automobile lending programme in 2023, which offers citizens a discount of up to 25 percent for cars that cost up to 2 million roubles. Other measures include providing a deferral on scrappage fee payment and subsidies for manufacturers for the development of electric and gas-powered vehicles. But at the same time, we believe that this work is not done yet. It needs to be continued to provide for the recovery of the backbone sector and support its competitive ability. In this regard, we request support for a draft federal law on setting requirements for the localisation of vehicles used for taxi and carsharing services, developed by the senators.

We also propose that the following amendments be introduced to the Governmental resolutions: increasing the disposal fee for legal entities and individuals when reselling a car within a three-year period since importing; ending the requirement that allows for adding points and assessing localisation in terms of future obligations because it puts current manufacturers in an unequal competitive environment; expanding localisation requirements for car rentals and transport services for state and municipal needs – I mean additional localisation requirements for taking part in the concessional automobile lending programme. These proposals, Mr Mishustin, have been prepared by us together with car manufacturers and are supported by the Ministry of Industry and Trade. We would like to ask you to work on them.

The second issue. Last week, we discussed the need to develop infrastructure for child recreation and wellness facilities. The President of the Russian Federation has given corresponding instructions. I want to thank the Government for supporting the proposal and launching a pilot project. This year, one billion roubles was allocated to the regions from the federal budget for co-financing the construction of prefabricated buildings in children’s summer camps. There were concerns that we would not make it in time, but we did: by the beginning of the summer health improvement campaign on June 1, 49 dorms were built in 26 camps in the record 100 days in 15 pilot regions. This project created 2,500 new additional spots and will allow an additional 10,000 children to stay at health improvement camps this summer. Another 18 Russian regions have joined the implementation of these measures with the funding provided by regional budgets. The results are very good overall. The project has proven its success: the children’s happy faces say it all. It should definitely be continued. We even sent a video clip of children talking about how well their summers are going to Mr Siluanov to build a positive atmosphere.

This year, 47 Russian regions expressed readiness to take part in the project; 59 regions said 127 dormitories need to be built in 2024; 43 regions say they require a major overhaul of cafeterias and medical units at organisations engaged in child wellness and recreation.

But we should not forget about the large cumulative effect, too: thus we are supporting the domestic manufacturer, because everything is domestic there, both the woodworking industry and others. However, nothing has changed in many camps since Soviet times, given the high wear and tear of the infrastructure for children’s recreation. Of course, updates must be continued.

As you have said, Mr Mishustin, at the initiative of the Federation Council, a law was adopted banning the reformatting of child wellness camps, which means that we will definitely preserve what is left. And of course, we need to put all this in order, so I ask you to issue respective instructions to the Ministry of Finance when drafting the budget for the next three years. We understand all the difficulties. We understand how difficult it is for the budget. But this money is very small, and the effect is enormous. These are priority areas, since we are talking about families, children, especially the children of teachers, doctors, and participants in the special military operation. Therefore, it is very important to provide the necessary funds in the budget in order to continue with this project.

Third, I would like you to issue instructions on a very sensitive topic: technical means for the rehabilitation of disabled people. Its special relevance is clear to everyone. We cannot depend on unreliable supplies from unfriendly countries. According to relevant institutes, the share of Russian manufacturers of lower limb prostheses does not exceed 20-25 percent, and upper limb prostheses no more than 10 percent. At the same time, our enterprises have all the necessary innovations to replace foreign products, however, it is very difficult to expand them without serious state support. In addition, special focus should be placed on the development of the production of materials necessary for the manufacture of prostheses in Russia. There are problems with this, too. I know that both the Ministry of Labour and the Ministry of Industry and Trade – Tatyana Golikova and I discussed this – are addressing this topic. But we must proceed from the fact that, in addition to high-quality smart prostheses, crutches, walkers, lighter and more comfortable wheelchairs, and much more are required. Therefore, in general, we need a programme to create a competitive, sustainable rehabilitation industry in Russia that meets the needs of people with disabilities with advanced and high-quality technical means of rehabilitation, as well as the adoption of additional measures of state support. Without this, this industry cannot really be developed, and the severity of this problem is obvious today.

Fourth, over the last seven years the Federation Council has been systematically addressing the topic of illegal alcohol. A range of laws and bylaws has been adopted with the support of the Government, for which we are also grateful, thanks to which we have achieved a significant drop in the illegal circulation of strong alcohol drinks and significantly replenished the federal and regional budgets. At the same time, the level of such illegal trafficking remains quite high: about 27 percent. It is possible to finally solve this problem. Action needs to be taken on three fronts. I would like to thank Minister of Finance Anton Siluanov, with whom we have worked out these proposals, and who supports them. But we face such resistance that we are simply amazed.

If we can solve this task, we can forget about illegal alcohol poisoning people. The main reason is that, along with poisoning with ethyl alcohol produced for alcoholic products and subject to a high excise tax, there is absolutely identical ethyl alcohol in circulation, which is produced for the needs of the medical, perfumery and cosmetic industries and is not subject to excise duty. As a result, the difference in the cost of these identical alcohols is more than 80 percent. Last year, while medicine required 1.6 million decilitres of medical alcohol, 6.8 million decilitres were produced; that is, four times more than the real need. Where does it go? From these 5.2 million decilitres of medical alcohol surplus, 13 million decilitres of illegal vodka and other alcohol-containing products were produced. Budget losses are estimated at 32 billion roubles.

In order to radically improve the situation, which has been discussed for several years now but without a breakthrough, our laws are not being promoted. It is necessary to impose an excise tax on all ethyl alcohol produced in Russia, so that there is no such difference and no more cheap ethyl alcohol for illegal vodka. At the same time, the payment of excise tax on alcohol purchased by healthcare institutions should be subsidised by the state. That is, we will win gain from it, and the part that is produced for healthcare – the Ministry of Finance has all the calculations – can be sold legally. There is no other way to deal with this problem.

Second in this part. The reason for mass poisoning with methanol – according to the Ministry of Health, more than 1,000 people a year – is that methanol, which is a potent poison and is produced in the amount of 4.5 million tonnes per year for the needs of the chemical industry, does not differ in taste and smell from ethyl alcohol. To avoid further deaths and poisoning, methanol denaturation is necessary, that is, its change in taste, colour or smell. Despite the fact that this possibility was confirmed by chemical scientists who worked on our request and confirmed this possibility, a powerful lobby opposes this in every possible way, finding a thousand non-existent reasons. In addition, it is necessary to transfer control over the production and circulation of methanol from the Ministry of Health to the Ministry of Industry and Trade. This is a very serious problem – and it has an easy solution. Just a bureaucratic machine, I would like to emphasise once again, with interested parties involved, is preventing us from moving in the right direction.

Third. Since 2015, during the period of active efforts to combat illegal alcohol trafficking, law enforcement agencies have seized about 160 million litres of surrogate alcohol and alcohol-containing liquids and counterfeit alcohol, as well as equipment used to produce counterfeit alcohol. About a third of this volume has been stored in the warehouses of Rosspirtprom and the Ministry of the Interior for more than three years. One billion roubles are annually allocated from the federal budget to pay for this storage. During this period, 7 billion roubles have already been paid for the storage of counterfeit alcohol and counterfeit equipment. Give this money to children's summer camps if we pass this law! At the same time, there is a risk of stealing surrogates from warehouses, which can also cause mass poisonings and deaths, as, for example, you know, the recent poisoning in the Volga Region: methanol was stolen from a warehouse, sold as alcohol, and so on. Well, what is the problem, we wonder? A key obstacle to the destruction of seized alcohol is the lack of court orders due to the complexity of the procedure itself and the lengthy nature of the evidentiary process in criminal cases. Federal Law 167-FZ has already introduced a mechanism for the destruction of alcoholic beverages confiscated in administrative cases out of court by decision of the Federal Service for Alcohol Market Regulation (Rosalkogolregulirovaniye). However, the bulk of the stored surrogate alcohol was seized by the Ministry of the Interior as part of criminal cases. Therefore, it is necessary to adopt a legislative act on the out-of-court destruction of illegal alcohol seized in criminal cases, too.

The main objection that they raise with us and thus do not support the law is that seized products are material evidence, that a court decision is needed. But none of the violators has ever filed a lawsuit over the past three years, because they are criminals. In our country, criminal cases are not closed, and material evidence cannot be destroyed. Well, let us give a deadline: if they have not applied within three months… There are a lot of solutions! It seems that someone is very satisfied with this situation, and the state inefficiently spends such large funds that are needed for other tasks. Please, instruct our colleagues to work on this issue, Mr Siluanov is also aware of this topic. But we should not drag it out, we must immediately decide and release federal money, put things in order in this area.

Now, one other thing. Mr Mishustin, I spoke to you briefly on the phone a while ago. Governors in regions often lament the poor condition of buildings and facilities, which are neglected and unused – and those are state-owned, federal institutions. When I tour a city and see some building with a ragged façade, they say: “This is not ours, this is federal property.” Obviously, the Federal Agency for State Property Management (Rosimushchestvo) lacks the funds (and always will) to maintain and repair these buildings. I believe that such property, which is not necessary for implementation of state functions and needs, should be extensively utilised in economic circulation, and efforts should be taken to find investors. I ask you to issue instructions on conducting a thorough inventory at Rosimushchestvo, which manages loads of property of various categories, both ministerial and others, and put it up for open auctions and tenders while ensuring transparency and equal access for investors. This will allow for a considerable replenishment of the budget, renewal of facilities to be used in commerce, culture or the social sphere, and improvement of the urban environment. It is just wrong to sit on the sidelines, saying it is not time yet and refusing to give property away while making no use of it – and all of this falls into disrepair and deteriorates.

I want to particularly thank the Government for supporting our proposals and for joint work on the law to improve the contract system. The statistics provided by the Ministry of Finance have shown that the volume of simpler and swifter procurement, for which we have expanded capabilities, has increased several times during a short period. Many thanks to you, Mr Mishustin, and to Mr Grigorenko. In two months, we have developed and adopted the law that is very useful for both governmental customers and state procurement participants, and it has proved efficient.

I should note that the Federation Council in general and the senators in particular are closely monitoring the developments in the regions, as well as regional budgets and other matters; we promptly respond to emerging problems and provide practical assistance and support. Mr Mishustin, we are prepared to continue working seriously to address new challenges jointly with the government, and take legislative action required for practical efforts.

We are aware that coordinated, effective and result-oriented efforts are now required from all branches of power. As Government members, you can rely on the Federation Council, the Chamber of Regions. I think we have already proved this. Thank you very much.

Mikhail Mishustin: No doubt about it.

Thank you, esteemed Ms Matvienko. In your remarks, you touched on many socially important, meaningful themes. I’ll comment on them in brief.

I will start with the end, with your permission.

First, I shall comment on the contractual system. I am grateful to you and also to esteemed Nikolai Zhuravlev, with whom we reviewed all amendments. We had a discussion. Mr Dmitry Grigorenko took part in it as well. I woud like to thank all my colleagues. I think we have done a very great job.

Now I will turn to governors and not only those who address the Government as regards buildings. Rosimushchestvo (the Federal Agency for State Property Management) has done its job. After taking an inventory, it has compiled lists of many properties to be included in the plan for privatisation, for purchase. Not everything is so easy. There are different buildings but usually they want to take titbits. Comparing different purchases, they don’t want buildings that don’t have good value. There are certain nuances in this.

That said, I agree that we should do more to sell the property that could be used to develop regions, for good territorial planning, social projects and many other practical undertakings. Marat Khusnullin received an instruction to this effect. He called you and reported to you. He also contacted Head of Rosimushchestvo Vadim Yakovenko.

Now I will turn to the remaining issues. I will start with the most important of them. It concerns the disabled. One of the main goals is to provide participants in the special military operation with everything necessary. Those who were affected during hostilities, who were wounded, who need care and attention, must receive required assistance.

As for the treatment in civilian medical institutions, budget funds for this purpose have already been sent to the Healthcare Ministry. Ms Golikova knows this issue and monitors it. These funds will also be spent on medical rehabilitation to help these people restore their health under the supervision of professionals.

We have also allocated funds for technical rehabilitation devices. The participants in the special military operation are primarily receiving this assistance from the Defence Ministry. The Defenders of the Fatherland State Fund is joining this work.

I would like to ask you, esteemed Ms Matvienko and you, my colleagues – I know you are attentive to this – to look at the situation in the regions because mishaps can always occur. It is vital for us to get feedback, as the President always tells us. This feedback is very important for us. Today, our response time is practically instantaneous. To find a solution, we are ready to do all we can and help you in this respect. So, I fully agree with you – this is a crucial issue. 

Another issue you touched upon concerns alcohol production and distribution controls which has a particular sense of urgency, because people die from consuming surrogate beverages. Importantly - Mr Grigorenko discussed it - these tragic events are not related to the business inspection moratorium. It was a criminal case, a theft that led to fatalities. The culprits have been identified and will be brought to justice.

Whenever life and health hazards are involved, routine and unscheduled inspections can be conducted at organisations of any level to prevent safety threats.

Without a doubt, this work must continue. Of course, people are concerned about the way such beverages are distributed. You mentioned it in your speech. We are now working on putting alcohol retail distribution in order which is important and has lots of subtle issues that need to be addressed. Colleagues, we teamed up with you to amend legislation, and starting 1 September consumers will be able to check the authenticity and quality of their purchases, including low-alcohol beverages, in order to protect people against life-threatening counterfeit products. Every buyer will now be able to run a check on the producer and the production method.

The President has recently signed off on a law that toughens penalties for illegal sales of methanol as an alcoholic beverage. You mentioned that as well. The law was supported by the Federation Council.

With regard to details concerning the Finance Ministry’s proposals on excise duties and the like, orders to that end will be issued. The Government will certainly look to see if more can be done in this regard.

Upgrading summer camp infrastructure is next on our agenda. Ms Matvienko, you invariably address this issue during our meetings. It is under the President's special control, and the Government is focusing on it just as much as the Federation Council.

We are taking every measure to ensure that children’s health is well provided for. It is a matter of concern in every family in our country. We are helping the Russian regions to properly address these issues.

You mentioned that this year and next year we will allocate 1 billion rubles to expand and upgrade the child accommodation infrastructure which primarily includes non-capital buildings that you mentioned, which can be built quickly and offer comfortable accommodation. We have approved the rules governing the provision and distribution of the subsidies mentioned before.

As you mentioned earlier, almost 50 new children's housing units for 2,500 guests had been built in 15 regions with the federal support by the time the summer season started meaning that more children will be able to take advantage depending on the size of allocations from the federal budget.

Ms Matvienko, I fully support the idea concerning the additional funds. It is a budgeting matter. However, we will do our best to support and increase allocations to this end in order to expand summer camp infrastructure in the country.

Next comes the domestic automobile industry which is a big and long-standing challenge.

Just a month ago, this situation was discussed in detail at the GAZ Group in Nizhny Novgorod. I visited this historic plant.

We have two tasks to address. One is to restart the production facilities vacated by our foreign partners, and the other is to build greater numbers of vehicles in Russia. Five regions have been identified which will work on these tasks, namely, Kaliningrad, Moscow, St Petersburg, Yelabuga, and Lipetsk.

The Government has compiled a list of priority areas for technological development of the automobile industry. We reviewed it in detail at a strategic session.

We provided for easy-term loans for the producers of automotive parts and components. We will continue with the extensive programme for low-cost leasing and car loans. We will provide support to the NGV industry.

The regions will take advantage of public procurement to renew the school bus fleet. The funds have been allocated by instruction of the President. In addition to school buses, the ambulance fleet will be renewed as well.

According to the President, we will not just focus on resolving the industry's current problems, but also create a long-term vector of technological change, which will allow us to provide the market with adequate supply. This is what everyone is expecting to see now.

With regard to drafting requirements concerning the localisation level for the production of taxicabs and car sharing vehicles, regulations in this area should be approached in a delicate manner. Above all, we need to balance carrier and passenger interests and to see if the automobile industry can cope with an order of that size.

The stakeholder ministries are working hard on a draft law submitted by the senators. I discussed this with Mr Manturov. I suggest our colleagues get involved in this work as well. I also heard questions about salvage. All of these issues will be reviewed by the Government soon.

Once again, Ms Matvienko, I would like to thank you and the Federation Council members for your effective cooperation. You said today that the Federation Council is a pillar in this sense. This is exactly how we see the Federation Council, which Government contacts on issues such as social development, economy, industrial and technological sovereignty. All of these items are part of the agenda of the President, the Federation Council, the State Duma and the Government.

Thank you. I will now take your questions, if any.

More to be posted soon...