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#17 - JRL 7140
April 9, 2003
Duma gives final approval to controversial housing bill
By Marina Sokolovskaya

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 bill 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 amendmentds by proposing cosmetic changes of their own to the text of the bill. The main goal of the reform, shifting the burden of housing maintenance costs from the state onto residents, nonetheless, remained unchanged.

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

But after the bill was returned to the second reading, Mitrokhin's amendment was, nevertheless, rejected, while another amendment, proposed by the centrists and concerning those with incomes below the subsistence level, was approved. Owing to the centrists' efforts, in the course of 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 once again approved in the second, and, subsequently in the third reading. 236 deputies voted in favour of the document; 181 were against it.

The bill approved by the deputies on Wednesday contains several rather tough measures. For example, it allows courts to evict tenants and members of their families for failing to pay bills six months in succession. At the same time such persons should then be provided with accommodation meeting 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 bill 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 to be 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 applicants' income statements.

The Yabloko faction, as promised earlier, unanimously voted against the government's bill. 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 utility rates increasing, while the quality of services will remain poor.

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

But Sergei Mitrokhin placed the entire blame for that on previous federal governments, beginning with Sergei Kiriyenko's (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 perceived largely as the final verdict, not subject to any further discussion.

And this is quite understandable: one of the main goals the government is pursuing by speeding up the housing sector reform is the privatization of companies rendering utility services. In the long run, it will lead to the largest and most profitable entities of the housing sector becoming privately owned. And on this matter the government and the deputies, as Wednesday's voting showed, have already reached an accord.

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