Continued effort to liberalise the HUS sector

As a consequence of these influences, an important policy document entitled 'Concept of HUS Reform' was signed into force by a presidential decree in the Spring of 1997 (O reforme, 1997). The Concept was elaborated by the combined effort of Gosstroy officials, the IUE and the Institute for Economics of HUS (Former Gosstroy official, 2007; Housing think tank expert, 2007). The adoption of the Concept can be interpreted as part of the government's continued effort to institutionalise the rest of the liberal policy paradigm. With this document, policy-makers reinstated their main liberal objectives and all the key HUS policy instruments adopted earlier - increases of HUS charges to 100 per cent by 2003; promotion of competition among HUS service providers; promotion of condominiums and housing inspections - but added a number of new liberal policy elements.

Most of the new policy initiatives proposed by the Concept related to the level of policy settings, which would underpin the operation of the instruments already in place. For instance, targets were set for the attainment of contractual relationships between municipalities and HUS enterprises: by 1998, 60 per cent of HUS operations had to be on a contractual basis and by 2000 the entire sector had to operate on this basis. Also targets were set for the formation of condominiums: they were to become the predominant form of housing management by 2003. A more controversial measure related to the level of settings was a target to allow the share of housing expenses in the income of an average Russian family to reach the level of 25 per cent.

The only innovation introduced by the Concept which can be classified as an entirely new policy instrument was an even more controversial transfer of the responsibility for the costs of capital repairs from municipalities, that is the state budget, to the owners of privatised apartments (Segodnya, 1997).

The adoption of the latter two measures immediately sparked controversy in the State Duma. Deputies were concerned about the affordability of the 25 per cent level of housing spending and the cost of housing capital repairs for the majority of Russia's 'cash-poor' owners of privatised flats. Later on, this concern of State Duma deputies provided one of the grounds for rejecting a draft of the new Housing Code developed by Gosstroy officials and their external advisors in early 1998. The outsiders of the housing policy process, at the same time, questioned the setting of the 25 per cent expenditure level for being too squarely based on American housing policy practice (see Section 5.3).

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