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Gazeta.ru, April 9, 2003

Duma gives final approval to a controversial draft law on housing and communal services reform

By: Marina Sokolovaskaya

In a move to overhaul the country's worn-out and heavily subsidized housing and municipal utilities sector, Russia's lower house on Wednesday approved amendments to the law on the federal housing policy proposed by the government. In view of the forthcoming parliamentary elections many deputies found it difficult to vote in favour of a law that, when enacted, is likely to complicate the lives of their electorate.

At the last moment the deputies made a feeble attempt to ease the effects of the government amendments by proposing cosmetic changes of their own to the text. The main goal of the reform, shifting the burden of housing maintenance costs from the state to residents, nonetheless, remained unchanged.

A group of deputies, including outspoken Communist Vassily Shandybin demanded that the lawl be rejected altogether, but their calls were ignored. Then Sergei Mitrokhin of the liberal Yabloko faction suggested that the law be returned to the second reading, claiming that the amendments to the law submitted earlier by his faction had not been reviewed.

But after the bill was returned for a second reading, Mitrokhin's amendment was rejected, while another amendment proposed by the centrists on individuals living on incomes below the subsistence level was approved. Owing to the centrists' efforts, during the first year of the reforms the increase in rent and utility payments for that category of tenants will not exceed 50 per cent.

After the amendment was passed, the bill was approved in the second and third readings: 236 deputies voted in favour of the document; 181 against.

The law approved by the deputies on Wednesday contains several rather stringent measures. For example, it makes it possible for courts to evict tenants and members of their families for failing to pay their bills for six months in a row. At the same time such individuals should then be provided with accommodation that complies with sanitary and technical standards.

The bill establishes that the rent includes payment for housing maintenance and repairs, and abolishes privileges presently enjoyed by war and labour veterans, teachers in rural areas and doctors - altogether, some 26 million Russians on low incomes.

In the opinion of the author of an alternative draft on housing reform, Oleg Shein, the government's plan amounts to a doubling of utility payments and an abolition of privileges beginning next year. The government wants to replace privileges with targeted subsidies for low-income households. At present, Shein noted, people receive those privileges automatically, whereas to receive a targeted subsidy they will have to stand in line and prove to bureaucrats that they are indeed entitled to assistance.

If targeted subsidies are granted depending on the income of a family on the basis of data provided by the applicant, the government will in the long run have to spend more on housing maintenance than it does today, or to establish an expensive and complicated procedure for verifying the personal income statements of applicants.

The Yabloko faction, as promised earlier, unanimously voted against the government's law. The faction believes the state leaves the population face to face with the entities rendering communal services that are going to retain their monopoly status, and the reforms will end up with a rise in utility rates, while the quality of the services will remain poor.

The government claims, however, that 40-80% of municipal budgets and a considerable proportion of regional budgets are spent annually on housing maintenance. Consequently, housing construction becomes unprofitable, as each new residential block or public installation adds to the burden carried by municipal budgets.

Mitrokhin, however, placed the entire blame on the previous federal governments, beginning with Sergei Kiriyenko's government (1998), which ''regularly stripped local budgets''. However, Yabloko's protests were ignored by most deputies: it was clear that they were not inclined to comment on the document, which was perceived largely as a final verdict not subject to further discussion.

And this is quite understandable: one of the main goals of the government is to privatise, by speeding up housing sector reform, the companies rendering utility services. In the long run, the largest and most profitable entities of the housing sector will be owned by private companies.


See also:

Housing and Communal Reform

Gazeta.ru, April 9, 2003

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