Presidential Address to Federal Assembly

Compressed file

The President of Russia delivered the Address to the Federal Assembly. The ceremony took place in Gostiny Dvor. The presentation of the Address was attended by Federation Council members, State Duma deputies, members of the Government, leaders of the Constitutional Court and Supreme Court, governors.

President of Russia Vladimir Putin: Members of the Federation Council, State Duma deputies, citizens of Russia,

Today’s Address is primarily devoted to matters of domestic social and economic development. I would like to focus on the objectives set forth in the May 2018 Executive Order and detailed in the national projects. Their content and the targets they set are a reflection of the demands and expectations of Russia’s citizens. People are at the core of the national projects, which are designed to bring about a new quality of life for all generations. This can only be achieved by generating momentum in Russia’s development.

These are long-term objectives that we have set for ourselves. However, work to achieve these strategic goals has to begin today. Time is always in short supply, as I have already said on numerous occasions, and you all know this all too well. There is simply no time for getting up to speed or making any adjustments. All in all, I believe that we have already completed the stage of articulating objectives and outlining tools for achieving our goals. Departing from the targets that were outlined would be unacceptable. It is true that these are challenging objectives. That being said, lowering the requirements for specific targets or watering them down is not an option. As I have already said, these are formidable challenges that require us to undertake major efforts. However, they are in step with the scale and pace of global change. It is our duty to keep pushing ahead and gaining momentum.

If someone prefers to work in the business as usual mode, without challenges, avoiding initiative or responsibility, they had better leave immediately. I already hear that some things are “impossible,” “too difficult,” “the standards are too high,” and “it will not work.” With such an attitude, you had better stay away.

Besides, you cannot fool the people. They are acutely aware of hypocrisy, lack of respect or any injustice. They have little interest in red tape and bureaucratic routine. It is important for people to see what is really being done and the impact it has on their lives and the lives of their families. And not sometime in the future, but now. We must not repeat the mistakes of the past decades and wait for communism to arrive. We have to change the situation for the better now.

Therefore, the work of the executive branch at all levels should be coordinated, meaningful and energetic. The Government of Russia must set the tone.

At the same time, I would like to emphasise and repeat: our development projects are not federal and even less so agency-based. They are national. Their results must be visible in each region of the Federation, in every municipality. It is here, on the ground, that the majority of specific tasks is implemented.

Allow me to underscore: thanks to years of common work and the results achieved, we can now direct and concentrate enormous financial resources – at least enormous for our country – on development goals. These resources have not come as a rainfall. We have not borrowed them. These funds have been earned by millions of our citizens – by the entire country. They need to be applied to increase the wealth of Russia and the wellbeing of Russian families.

Very soon, this year people should feel real changes for the better. It is on the basis of their opinion and assessments at the beginning of next year that we will evaluate the first results of our work on the national projects. And we will draw the appropriate conclusions about the work quality and performance at all levels of executive power.

Colleagues,

Let me now share some specifics on our objectives. I will begin with the key objective of preserving our nation, which means providing all-around support to families.

Family, childbirth, procreation and respect for the elderly have always served as a powerful moral framework for Russia and its multi-ethnic people. We have been doing everything in our power to strengthen family values and are committed to doing so in the future. In fact, our future is at stake. This is a task shared by the state, civil society, religious organisations, political parties and the media.

Russia has entered an extremely challenging period in terms of demographics. As you know, the birth rate is declining. As I have already said, this is caused by purely objective reasons, which have to do with the immense human losses and birth dearth experienced by our country in the 20th century, during the Great Patriotic War and the dramatic years following the dissolution of the Soviet Union. This does not mean, however, that we must accept this situation or come to terms with it. Definitely, not.

We succeeded in overcoming the negative demographic trends in the early 2000s, when our country faced extreme challenges. This seemed to be an impossible challenge at the time. Nevertheless, we succeeded, and I strongly believe that we can do it again by returning to natural population growth by late 2023 – early 2024.

Today, I wanted to talk about a new package of measures that has already been prepared to support families.

First, it is important that having children and bringing them up do not put families at the risk of poverty or undermine their wellbeing. As you know, we have already provided for the payment of subsidies for the first two children until they reach 18 months. Benefits for the first child are paid from the federal budget, and families can use the maternity capital subsidy for obtaining benefits for their second child. The size of the subsidy depends on the regional subsistence level for a child. It may vary from 8,000 rubles in Belgorod Region, for example, to 22,000 rubles in Chukotka Autonomous Area, with the national average of over 11,000 rubles a month per child. Currently these allocations are reserved to families whose income does not exceed the subsistence wage multiplied by 1.5 per person. It is time that we make the next step.

Starting January 1, 2020, I propose raising the bar to two subsistence wages per family member. This is what people have requested and these requests come directly into the Executive Office. This measure will increase the number of families entitled to additional benefits by almost 50 percent. Some 70 percent of families with one or two children will be able to benefit from help from the Government.

Second. At present, carers looking after children with disabilities and people disabled since childhood receive an allowance of only 5,500 rubles. I suggest increasing this to 10,000 rubles, starting July 1. Of course, I understand that it is still a small amount. However, it will be an additional measure of support for families with a child who needs special care.

Third. The income of Russian families must, of course, increase. This is a serious task that requires a comprehensive solution. I will speak about this in greater detail later. But we need direct measures. First of all, the tax burden on families needs to be relieved. The approach should be very simple: the more children there are, the lower the tax. I propose increasing federal tax relief on real estate for families with many children. I also propose lifting taxes on 5 square metres in a flat and 7 square metres in a house per each child.

What does this mean? If, for example, right now, 20 square metres in a flat are not subject to tax, the new measure will mean that for a family with three children, an extra 15 square metres will not be subject to tax. Regarding plots of land that belong to families with many children, I propose that 600 square metres should be exempt from tax, and this means most plots of land will be free from taxation. Let me remind you that this benefit is already available to pensioners and people of pre-retirement age. Of course, in many Russian regions there are local tax benefits on land and property for large families. However, the benefit being imposed at the federal level guarantees that it will be available everywhere in the country. I want to ask regional officials to propose additional tax measures to support families with children.

Fourth, the Government and the Central Bank need to consistently maintain the policy to lower mortgage rates to 9 percent, and then to 8 percent or below, as stipulated in the May 2018 Executive Order. At the same time, special measures of support should be provided for families with children, of course. As a reminder, last year, a preferential mortgage programme was launched for families that have had their second or subsequent child. The rate for them is 6 percent. Anything higher is subsidised by the state. However, only 4,500 families have used the benefit.

The question is why. It means that people are somehow dissatisfied with the proposed conditions. But it is also clear why. A family making a decision to buy housing certainly makes plans for a long or at least medium term, a lasting investment. But with this programme, they take out a loan, start paying the instalments, and the grace period ends. The interest is actually subsidised only for the first 3 or 5 years. I propose extending the benefit for the entire term of the mortgage loan.

Yes, of course, it will require additional funding, and the cost will be rather high: 7.6 billion rubles in 2019, 21.7 billion rubles in 2020, and 30.6 billion rubles in 2021. But the programme is estimated to reach as many as 600,000 families. We certainly need to find the money. We know where to get it. We have it, and we just need to use it in the areas that are of major importance to us.

And one more direct action solution. Considering the sustainability and stability of the macroeconomic situation in the country and the growth of the state’s revenues, I consider it possible to introduce another measure of support for families having a third and subsequent children. I suggest paying 450,000 rubles directly from the federal budget to cover this sum from their mortgage. Importantly, I propose backdating this payment starting January 1, 2019, recalculating it and allocating relevant sums in this year’s budget.

Let us see what we have. If we add this sum to the maternity capital, which can also be used for mortgage payments, we will get over 900,000 rubles. In many regions, this is a substantial part of the cost of a flat. I would like to draw the attention of the Government and the State Duma to this issue. If need be, the budget will have to be adjusted accordingly. An additional 26.2 billion rubles will be required for this in 2019. The relevant figures for 2020 and 2021 are 28.6 billion rubles and 30.1 billion rubles, respectively. These are huge funds but they should be allocated and used in what I have already described as a very important area.

It is necessary to give families an opportunity not only to buy ready-made housing but also to build their own housing on their land. I would like to ask the Government to draft in cooperation with the Central Bank convenient and, most importantly, affordable financial instruments for supporting private housing construction because it is not covered by mortgage loans today.

And, last but not least, the tax on land must be fair. Obviously, the cadastral or market value of a land plot can change but tax rates must not go up and down unpredictably like roller coaster rides. We have already limited to 10 percent the annual growth of the tax rates for residential property. I suggest establishing the same limit for land plots.

Source