To pay or not to pay

Russia’s reform of the communal and housing sectors is rather slow, but it is inevitable. The government has been concerned about the state of this sphere for a long time already. However, the problem is extremely complicated and very painful for the majority of the population, and the methods of shock therapy proposed by deputy Gaidar cannot be applied here. However, there is no longer time to further delay reforms.

Everybody knows now that the public utilities will increase, but nobody knows to what extent. Some specialists even say that it is to increase not less than twice, as compared with the current amount. Some of the specialists mention even bigger amounts. However, there are no forecasts for any changes in the quality of the services provided after such an increase of the charges. The government hopes that the quality will increase as soon as the charges rise. However, most independent experts doubt it will.

The problem is that is a really hard task to persuade businessmen to invest in the communal and housing sector. Many apartment buildings in Russia are in a very poor condition, and any businessman who invests in the housing sector will soon be ruined by the costs of repairing electric wiring and water pipes. The costs will hardly becovered, because the majority of the Russian population cannot pay 100% of their utility bills.

A system of target subsidies, so widely advertised by the government, is believed to be able to solve the problem. The idea of the system is the following: well-to-do people will pay 100% of their utility bills, and people with low incomes are to receive special subsidies to pay for their public utilities. The idea seems to be wonderful, but problems will arise with its implementation.

An experiment that was held in Moscow may serve an example here. Starting with beginning of 2002, Muscovites with incomes of over 8,500 rubles per month were asked to pay 100% of their public utilities bills on their own free will. The result is rather unconvincing so far, which was expected. Only several dozen people out of millions of well-to-do Muscovites agreed to pay 100% of their public utilities. No conclusions can be drawn so far at this initial stage. However, it is quite evident that Muscovites do not wish to pay more, as they do not believe the quality of communal services will increase afterwards.

At the same time, people in all of Russia’s regions duly pay public utility bills. The threats of the authorities to evict debtors have had an effect. Such threats are more likely to be used in the future as well, and in some places, they will probably be realized.

The government thinks that the Russian people are to spend not more than 22% of the income on the payment of their utility bills. Nowadays, some people pay even more, and, by the way, it is not clear how the limit of 22% is to be observed: the prices of gas, electricity, and water are constantly growing. Thus, the subsidies that are planned to be granted to people with low incomes are to be increased as well. Then a question arises as to whether it will be possible to find enough money for such subsidies, especially considering the fact that there are lots of privileged categories of people in Russia who pay only part of the public utilities.

Russia’s Minister for Labor and Social Development Alexander Pochinok says that 41 categories of the Russians pertain to the privileged group (32 million people): 19.6 million labor veterans, 11.2 million invalids, 1.6 million war participants, 250,000 liquidators of the Chernobyl catastrophe, and 500,000 people subjected to repression. At that, 120 billion rubles is appropriated annually as subsidies to the communal and housing sector, and only 3 billion rubles is appropriated as subsidies to indigent people. The situation is obviously abnormal. Still, the money transferred is not even enough for the communal sphere.

Russian authorities cannot be guided by the scheme applied in the USA, where people spend up to 50-70% of the earnings on utility bills. The living standard there is much higher than in Russia, which is why some plan needs to be created to make reform go easier.

However, it is evident that, sooner or later, the people of Russia will have to pay 100% of the public utility bills. The problem is whether the quality of the services provided will improve then, and whether the heat supply will be regular in winter. To tell the truth, this can hardly be believed.

Oleg Artyukov PRAVDA.Ru

Translated by Maria Gousseva

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