Thursday 12 January 2012

Let's Be Rational About Political Salaries

Ministerial pay report draws on sound principles
By Goh Choon Kang, Published The Straits Times, 11 Jan 2012

THE committee to review ministerial salaries, chaired by Mr Gerard Ee, submitted a report to the Government at the end of last month. Heated discussion sparked off by the proposed changes was expected. Different people and groups voicing different and varying opinions, according to their own understanding, standpoints and motives, were also expected.

If the issue is discussed with public interest in mind, then this independent committee's report should be reaffirmed. It embodies several important ideas and principles, which should be highlighted, instead of being ignored and drowned out by the debate over the monetary figures of salaries.

If we can use it as the basis of a rational discussion on political salaries, not held hostage by populist politics or influenced by political emotions, then our methods of formulating political salaries can become another creative product of Singapore's democracy. In general, Mr Ee's report should be reaffirmed.

First, this is the Government's first independent committee appointed since the introduction of the political salary formula in 1994. It takes into account expert knowledge from professional human resource firms and feedback from the public.

Second, pay-cut margins proposed are large enough, and meet people's expectations.

Third, the benchmarks for calculating the salaries have been expanded to make them more stable.

Fourth, it proposes more assessment criteria pegged to actual performance or political achievements, for example the 'National Bonus'.

Lastly, it rectifies the abnormality of the President drawing a higher salary than the Prime Minister.

Besides laying down details on calculation formulas of political salaries, I think what is more important is that the committee has established a few broad principles: emphasising that political salaries remain competitive, 'discounting' the benchmarks to highlight the dedication one must possess when joining the public service, and stating that political salaries must be 'clean wages' with no hidden subsidies or benefits.

Singaporeans should agree with these principles, which the Government also upholds.

Public reaction shows that the committee's proposals are heading in the right direction in general despite some details with room for deliberation and improvement. The calculation formula proposed is more convincing than the previous one, and it can be seen as an improvement on its predecessor. It also reaffirms the point that formulating political salaries can be done objectively.

The issue of political salaries is taboo in many democratic countries. To many people, entering politics entails dedication and sacrifice without regard to remuneration. No elected government dares to do what Singapore has done. Anyone brave enough to speak the truth about the issue would be flamed online.

Therefore, the ruling party has shown rare political courage by facing the issue and allowing open discussions. However, it will not be easy getting a consensus. Parliament will debate over the report and it is worth observing how our leaders will prevail over dissent and put up a convincing argument.

There is nothing wrong in saying entering politics is a calling and thus requires passion. We agree on recruiting people of virtue and talent, but lose courage and refrain from talking about political salaries.

We adopt a politically correct attitude of showing contempt for high pay (which is actually just competitive pay). The issue of political salaries is therefore an inhibition in many places ruled by populism, since it would trigger negative sentiment. It is indeed a big political challenge for Singapore to remove this inhibition.

Good governance under a capable government is imperative to Singapore's survival and development. This consensus must be established. Next would be to attract the virtuous and talented into politics and this involves the problem of pay, which requires a concrete solution.

High pay does not equate with talent but it is unrealistic to avoid the issue, as we are now living in peace, not the turbulent era of a revolution.

Some people contradict themselves by citing politicians from Mr Lee Kuan Yew's era in their arguments against high pay. They should face the fact that times are different. The annual pay of first United States president George Washington was US$25,000 (calculated to be equivalent to US$566,000 in 2009) which he donated to his country.

That was during a revolution and Americans today do not require their presidents to emulate Washington.

US presidents have had only five pay rises since 1789, or an increment about once every 45 years. After taking inflation into account, Mr Barack Obama's annual pay of US$400,000 (S$519,000) is actually less than that of the first president. Therefore, US presidents are getting poorer in the eyes of some people.

Is this a case of things going from bad to worse? American academics have pointed out that the US civil service lacked top talent as civil servants were paid low and uncompetitive salaries.

This could have led to poor governance as seen in Washington's inability to control Wall Street's big alligators and fat cats, which sparked the global financial crisis. This is the price of mediocre politics.

Let's assess how the Cabinet has performed in areas such as dealing with major crises, ensuring Singapore's stability, attracting foreign investments and creating jobs. Do the office-holders deserve the pay they are getting? Singapore's per capita GDP rose from $1,580 in 1965 to $59,813 in 2010. We have the biggest national reserves in Asia. Would these be possible without a capable and committed government?

Others have pointed out that not all ministers were corporate high-fliers prior to entering politics, implying that they might not have sacrificed income or should not get such high political salaries.

To be fair, one who is up to the job deserves the specified pay regardless of one's background. Competency should be the yardstick.

To set a competitive pay level for a political position does not mean the office-holder will be a virtuous talent in governance. It means the position is very important and has high requirements that only a virtuous and competent person can meet, and thus deserves that pay.

In the event of incompetence, the office-holder must be replaced immediately. This would enable the government to rule the country most effectively. Therefore, the people have every reason to demand that the office-holders meet the requirements, show results and be held accountable for policies. To win public trust, the Prime Minister must be fair and strict when rewarding and punishing his Cabinet members.

A reader wrote to the English press saying our politicians did not sacrifice much when entering politics as they did not have to worry about personal safety, because of a low crime rate; they also enjoyed privacy unlike their British counterparts who were hounded by the paparazzi; they received support from the public agencies and were held in respect by the public.

Such comments are nothing more than empty talk inappropriate for discussing such an important political issue. Entering politics is no walk in the park - just look at the fate of politicians George Yeo, Lim Hwee Hua, Zainul Abidin Rasheed, Ong Ye Kung and Raymond Lim after the general election in May last year. We can be nonchalant but how would we feel if they were our spouses or children?

A number of Singaporeans are under the false impression that it is easy to be a minister here. How difficult can it be when politics is simple and smooth-sailing here? This may be why people overlook the importance of having virtuous and capable leaders, and think that Singapore can still prosper under mediocre politics. How naive!

The proof of the pudding is in the eating, goes a Western proverb. As eating is the top pastime here, Singaporeans should know there is no such thing as cheap and good food. Avoid the kitchen if one cannot stand the heat, but how do we get a good chef then? We must accept the fact that the era which produced Mr Lee Kuan Yew, Dr Goh Keng Swee and others has passed, as have the times that gave birth to Washington and Deng Xiaoping.

A country can never enjoy the good fortune of always having such politicians.

I, therefore, agree with the report that we cannot depend on luck in selecting and grooming our leaders, as Singapore is small and lacks talent. Our system must be able to attract political talent when people are in their prime, so that they can devote their best years to political service. It is thus necessary to pay them competitive salaries.

This commentary appeared in Chinese language daily Lianhe Zaobao on Monday (9 Jan 2012). Translated by Kua Yu-Lin and Ho Cheeng Cheeng.

Clean wage versus pay with perks
By Calvin Cheng, Published The Straits Times, 10 Jan 2012

THERE is no doubt that the issue of ministerial pay is an emotional one, but in the midst of heated debate, it is still useful to reason with cool heads.

First, not enough attention has been paid to the principle of 'clean wage'. This principle is not only at the heart of the report by the committee to review political salaries, but it is also the premise on which the entire system of ministerial wages is based - from the beginning, when Mr Lee Kuan Yew implemented it, right up till now.

The wage that office-holders in Singapore get is the totality of the remuneration they receive - there are no hidden perks like hospitalisation benefits, housing benefits and tax exemptions. With the exception of the president, the prime minister and the speaker of Parliament, no office-holder or MP is given a car for personal use. And even then, the use of the car is a taxable benefit rather than a perk. This is exceptional compared with in most countries, especially at the ministerial level.

This point cannot be emphasised enough. Much has been said online, in the local press and in the international press about our leaders being the best-paid. The benchmark for this is the salary, specifically the cash component of an office-holder's income. This is not a fair comparison. The most quoted example one sees repeated ad nauseam is the United States president's salary of US$400,000 (S$520,000). But this does not take into account all his other benefits, which include free accommodation in the White House, use of its army of servants and staff, official transport and a whole range of other perks and non-cash benefits.

It is also interesting to note that the reported salary of the president of China is US$11,000. Without being facetious, one wonders how such a salary could possibly allow him respectable accommodation of any sort, even if he were just to rent a home in Beijing. It was also the 'benefits' part of remuneration that led to the scandal involving expense claims, specifically housing claims, of British MPs.

The strength of our clean-wage system is also its weakness. The transparency of this system allows us to know exactly how much our political office-holders get. But the difficulty is that we alone implement this system. When nobody else in the world has a clean-wage system, and all comparisons are made purely on cash income, then our leaders will always look like the highest-paid.

The crucial question then is whether it is foolhardy for the Singapore Government to stand alone in a world where nobody else offers a clean-wage system. As an emotive issue, and with continual unfair comparisons being made purely on cash income, a good system has become a public-relations disaster. No amount of explanation will defuse the issue when the stark contrast keeps getting emphasised in salary league tables. The Singaporean voter could, in the end, be no different from and no less human than any voter or citizen anywhere else in the world, and a remuneration system with perks and benefits could prove more politically palatable than a clean-wage system.

Second, to poll the man in the street about what he thinks of a million-dollar salary is pointless. The problem is one of perspective, and the perspective of top income earners anywhere in the world is something no man in the street can empathise with - whatever method one uses to arrive at the pay is irrelevant once that number is large enough.

To the average man, a pay cut of a third from $1.5 million to $1 million still leaves an unfathomable sum. But the $500,000 difference could lead to a real impact on one's standard of living as it could mean the difference of meeting that mortgage payment on one's house.

We cannot possibly expect our office- holders to sell their houses and downgrade to take up their appointments. By the time some of these potential office- holders reach their 40s, they would have settled into a certain lifestyle that requires a certain income to upkeep. To expect these people to sell their houses, their cars, or forgo their children's education overseas is just an idealism that bears no relation to reality.

In the end, we will end up only like other countries, where only people who are financially independent and secure will enter politics seriously.

Third, while we appreciate and value the ethos of public service, it is unwise to overplay it. The generation of Mr Lee and Dr Goh Keng Swee were born in a time of chaos, revolution and change in a post-colonial world. Even then, it was pure luck that we got these people rather than the rapacious leaders who impoverished many countries that became independent at the same time as Singapore.

We could thus pay low wages and hope that some able, altruistic men and women would step forward, or create a system that increases the chances that we will still get able leaders, altruistic or not.

At the end of the day, we are looking not only for servants but also leaders with specific skill sets to govern our country, manage our economy and make policies that would affect our country's future. Beyond a calling, there is thus also a job to be done, and to get people with the right technocratic skills to get this job done well, there is no shame in paying for it. We must not confuse political governance with charity work.

Finally, in the heated and emotional debate over ministerial salary, it is disappointing to see the often rude and offensive criticism of Senior Minister of State Grace Fu on the Internet in response to her honest reaction to the ministerial wage cuts.

Respect may have to be earned, but surely civility does not.

The writer is a former Nominated MP.

The incalculable value of public service
By Gillian Koh, Published The Straits Times, 10 Jan 2012

NO SALARY, high or low, captures the passion and public spiritedness we hope drives the men and women that serve as our political leaders. Citizens look to them to shape the destiny of the nation in both day-to-day and big policy decisions.

Members of today's Cabinet cannot possibly be driven by their salaries alone to play that role. They indefatigably attend to their policy portfolios juggling the diverse interests of the country, foster international ties to expand our diplomatic and economic interests, and conduct public engagement to understand the ground in the day. At night and on weekends, they deal with community issues, preside over grassroots activities and minister to individual constituents' needs at weekly meet-the-people sessions.

Today's political opposition and some members of the public insinuate that political office holders, past and present, take up their office to 'enrich themselves'. This is handy political rhetoric, but difficult to substantiate. It does whip up public sentiment, especially when, as reality would have it, the nominal median wage level of our citizens in 2010 was $2,588 according to an October 2011 paper issued jointly by the Ministry of Manpower and Department of Statistics.

This disjunct in the structure of our income distribution provides the background to the political disjunct we face in our national conversation about ministerial salaries. To speak of a basic fixed 13 months' pay for an entry-level minister of $607,750 or $46,750 a month recommended by the Ministerial Salaries Committee will still have people's eyes glazing over or getting bloodshot with rage. This income divide is a result of globalisation and is a policy outcome of the ruling People's Action Party's economic policies.

The committee has suggested a 40 per cent discount on private sector salaries - but is it not futile to think of ministerial salaries in that manner? The very notion mixes up market norms (private sector salaries) with social norms (public service).

'When we keep social norms and market norms on their separate paths, life hums along pretty well... when social and market norms collide, trouble sets in,' writes Dan Ariely in Predictably Irrational. The behavioural economist cites the idea of paying one's mother-in-law for a well-relished Thanksgiving dinner, or spouse for sex. It will probably be the last time you'll have any more of either.

In the same way, it is unbecoming to discuss public service as a 'discount' on a private sector salary. This is where the social and the market have collided and has been reduced to a bidding war over discounts. The value of the involved, diverse 24/7 jobs that ministers do and their sense of responsibility to the country is diminished in attempting to measure it in dollars and cents.

It can only be a race to the bottom as we have seen in the voluntary welfare sector today - that chief executive officers and their staff must be paid a pittance to demonstrate their sacrifice for charity. Even grant-makers, beneficiaries and well-meaning supporters are reluctant to pay well for the operational costs of such organisations.

Instead of talking about 'discount' or 'sacrifice', the wage of political office- holders should do just one thing - ensure that their families are taken care of such that the question of money does not distract or become a burden. That level will have to be pegged at the basic living conditions of what families of their professional peers have. This is where the idea of an income benchmark applies, but of a much broader swathe of people, say, the average income of the top 10th or 20th percentile of citizen income earners.

Framed in that manner, if this wage is set at a reasonable level, and is reviewed periodically to track existing conditions to keep up with the norms of this broad reference group, the issue of integrity will also be addressed. There would be no excuse for rent-seeking behaviour to pad current lifestyle or to store up deals for the 'after-life'.

The same punitive measures for the prosecution of corruption, the surveillance of the Corrupt Practices Investigation Bureau and whistle-blowing activism of the public established in our country's early years must become more sophisticated. An independent, transparent way to provide for the declaration and monitoring of interests of office-holders and related persons will be critical if we anticipate that more will enter from the business arena.

Singapore is not short on talent. What talented folks with an altruistic desire to serve the country, with a people-oriented sensibility and strategic-thinking ability, finally do depends on their personal political philosophy, the openness of political parties to embrace them and the extent to which they are daunted by how demanding citizens can get.

Perhaps the current proposal is a half- step to a final solution where we de-link our discussion of what we pay political office-holders from the virtue of their service to improve the lives of fellow citizens and the nation at large. No sum can be fully commensurate with such a job well done, and not a cent should be awarded where there has been a dereliction of that duty.

Setting these salary structures is not a science but must be a result of reasoned debate of the quality of governance we seek to achieve (which is already much vaunted internationally), and the many ways we should find to honour the incalculable value of public service.

The writer is senior research fellow at the Institute of Policy Studies, Lee Kuan Yew School of Public Policy at NUS.

The best government that money alone cannot buy
By Antonio L. Rappa, The Straits Times, 13 Jan 2012

THE big news about town and cyberspace revolves around ministerial and other politicians' pay cuts. The new government under Prime Minister Lee Hsien Loong has already undertaken several radical measures as a direct result of the People's Action Party's (PAP) performance in the 2011 General Election. The global economic malfeasance also makes it the right time for these cuts.

But not everyone is happy. Some say the cuts are in the right direction but the formula is flawed. Some say cut more, others say cut less, a few say don't cut.

Some of the reactions stem from basic human behaviour. First, it is a basic human need to release stress by criticising authority. The reason people have been up in arms about ministerial pay increases all these many years is because the issue has not been explained effectively. That was how the problem eventually fell into PM Lee's lap.

Second, it is human to compare. So people zoom in on the pay of ministers - over $1 million even after the proposed cut - with their own wages and their imagination and sense of envy run wild. Views motivated by envy are valid in expressing a point of view, but not to be taken as serious critiques of the issue.

Unfortunately, the fruits of growth have not been evenly distributed in the last decade, due to globalisation. The gap between the richest rich and the poorest poor yawns wider than ever. But this difference in earning power is not unique to Singapore. It is a feature of globalisation. The display of materialist goods and services from New York to Dubai re-generates the seed of envy between the haves and the have nots.

What is most perturbing is the growing gap between the merely rich and the ultra rich. Jealousy is not more dangerous than when felt by the middle-class rich - who should be happy individuals and the bulwark of stability in a society - towards the ultra rich.

Singaporeans are already among the wealthiest people in history and on this planet right now. Don't begrudge what we have achieved. Why squander Singaporean wealth with politics on the cheap?

Singaporeans have forgotten that the highest paid politicians in the world are not the richest politicians in the world. Highest paid means you qualify, you work, save, invest and get rich. 'Richest' is a more comprehensive concept: You get money from multiple sources.

Singaporeans have come to expect the highest standards from our ministers and MPs. This means that if a minister or MP has unaccounted money, he will be found out. Singaporeans are generally intolerant of corruption. It remains an important norm. All office bearers from the Speaker to the backbencher must remain above board in all their dealings all the time.

Over a decade ago, a weak Singapore government would have given billions of dollars away in foreign aid to a friendly neighbour if we had weak ministers who were cowed by bullying tactics. Thankfully we had leaders, some still in government, who made the right decision. This tells us that one has to pay a man what is right. Not more, but not less. Because that would be unethical.

We should not risk our children's future by thinking good government may be had on the cheap. It is not the Great Singapore Sale.

MPs spend long hours listening to various issues raised by their constituents. It is long, repetitive and monotonous. We should not begrudge the allowances of our MPs, opposition or otherwise. They work hard for the money.

There are two critical takeaways from the recent politicians' pay-cuts. Firstly, these cuts should not become the new creed for the other arms of government. The worst thing to do would be to cut civil service salaries including the salaries of magistrates and judges. Singaporeans would be much worse off if public service pays so little, people hanker for more and are tempted by graft.

Secondly, the cuts should not be the precedent for annual pay cut exercises for MPs or politicians or anyone in the public or private sector. This would demoralise workers and cause them to seek employment elsewhere.

A third takeaway is that even after the pay cuts, the PAP must work hard to get people who earned more in the private sector, to enter politics. The pay is not an inducement; just reasonable compensation for a very difficult job.

It would be foolhardy to think that we can get good government on the cheap. But it would be even more foolish to use pay as an incentive.

We should strive to elect the best government that money alone cannot buy.

The writer is associate professor and Head of Management and Security Studies at UniSIM Business School and the author of Globalization: Power, Legitimacy, Authority (Iseas Press, 2011).

Unrealistic to compare Singapore with others

ARGUMENTS that the salaries of our ministers ought to be pegged to those of political leaders from other developed countries are naive and simplistic, as they fail to consider the generous perks and benefits these politicians enjoy and a slew of other factors ('Ministers' starting pay cut to less than $1 million'; last Thursday).

For example, the pool of top talent is much deeper in the United States compared to Singapore. But it is well known that the bulk of US talent resides in the private sector.

It is the opposite here.

Most Singaporeans look to the Government to provide quality public services from housing to health care. In return, the civil service and the Government seek to attract and retain the best brains with competitive wages to serve the country.
Above all, those who argue that aspiring to political leadership is primarily about making a personal and altruistic sacrifice have also omitted the fact that the MPs' allowance is more generous than the personal income of some parliamentarians, including a few members of the opposition.

If these politicians have gained financially from being elected into Parliament, why should we expect a high-earning, high-calibre candidate from the private sector to suffer a huge pay cut?

Overall, the pay review committee has done a fine job balancing public duty with private perks, although I have four more suggestions:

Draw up a salary scale for each ministerial grade and give a weighting of, say, 5 per cent to experience, the last-drawn pay and potential earning power of each new minister as part of the variable pay component.

The prime minister may then adjust the salaries of Cabinet members over time based on their respective performances and scope of responsibilities.

Cut the Speaker of Parliament's $550,000 annual pay, which is about six times that of his two deputies, and more than twice the allowance of a backbencher.

Consider an allowance for MPs who chair government parliamentary committees.

Remove the allowances of Nominated MPs and Non-Constituency MPs. These 'parliamentarians' are not elected by the people nor are they accountable to them.

If they are being paid to raise their own profiles for the next general election or lobby for a particular cause, then it's fair to say that those from the private sector who are selected to sit on government-led economic panels, or members of the public who offer useful policy suggestions to the authorities on their own time, ought to be compensated as well.

Toh Cheng Seong
ST Forum, 10 Jan 2012

Debate over ministerial pay is value-laden
Letter from Tan Kee Lin, TODAY, 9 Jan 2012

I WAS listening to 938LIVE when callers were discussing ministerial pay. One listener mentioned the values, such as honesty and fairness, that our leaders must have.

I think one of the reasons people get incensed about high ministerial pay is that they see a distortion of values among some of our elite, or even in the general population, who equate success with how much money one has.

It goes against all that is esteemed in our moral and civic lessons or in religious texts.

I also see an ugly side among some Singaporeans who expect their leaders to be as poor as them, a thinking akin to: "If I can't have the goods of my neighbour, I want him to lose his goods, too."

Ministerial pay is not a case of either/or, and one value should be mentioned in this debate: Thankfulness, the value that precedes resilience. If one can be thankful for what one has, one can be resilient in studies, work or life.

To put it simply, I want my leaders to serve with a heart, but I will not be envious of them or anybody else if they have more in wealth or health.

A country unlike any other
Letter from Jonathan Toh, TODAY, 9 Jan 2012

I REFER to the letter "Pay does not equate talent" (Jan 7). If we want to compare with other countries, we should pick one that is similar to ours.

United States presidential hopeful Mitt Romney and New York City Mayor Michael Bloomberg may seem to be good examples.

However, for every one such person we could find in Singapore, the US could find 100, just by the sheer size of the country. By the same logic, if the US could find one such person, we probably would take 100 times longer to do so.

Try to pick one country that is similar to ours and we encounter difficulties. We are not a country, not a city, but a city state.

Is there a similar-sized country in terms of population, land area, economy, lack of natural resources and is multiracial, multilingual, multicultural and multi-religious?

One might think of Hong Kong. But Hong Kong is a Special Administrative Region of China, is predominantly Chinese and need not worry about foreign affairs and defence. That is a huge burden off the budget.

Having China as a big brother is a huge insurance against being pushed around in a hostile world. So I hope Singaporeans realise our unique challenges.

Let us attract the best we have to lead us, as long as they love the country. This should include people with different degrees of tolerance for financial sacrifice.

Our talent pool is not big, so we should not say, "let us attract only altruistic people to serve".

On the point about Member of Parliament Chen Show Mao, I would point out that he is the same age (50) as Minister Vivian Balakrishnan, who entered politics earlier. Mr Chen made his millions before joining politics.

The fundamental question here is whether we should attract younger people to serve and groom them into ministers.

Finally, divide S$1.1 million by our citizen population of 3.26 million. The cost is S$0.34 per minister per year. Consider this as investment in good government, that other countries underpay their leaders does not mean we have to follow.

Many countries have corrupt leaders; others have hidden costs and benefits. The US President is cheap on salary, expensive on perks, for example, holidays at Camp David, flying by Air Force One (plus one decoy plane) and Marine One (two decoy helicopters).

The US President earns a couple of hundred thousand dollars per talk after retirement. Who wants to listen to a Singapore politician other than Mr Lee Kuan Yew?

Take wider view in paying ministers

Understand the irony of the ministerial pay review ('Ministers' starting pay cut to less than $1 million'; yesterday).

If a citizen cannot find fault with a minister, he can always find fault with his pay.

When setting up his team in June last year, Mr Gerard Ee, chairman of the ministerial pay review committee, said his team would apply a human resource perspective, using grade, job size, scale and impact of work, to determine the pay of political leaders.

It was not easy.

There is no formula to compute the salary of political leaders anywhere else which the committee could borrow.

For instance, assessing the 'impact of work' criterion alone would jack the salary of the Prime Minister or President many times higher than the highest-paid individual in the private sector; it also means the President of the United States should be paid a few hundred million dollars a year.

The issue over ministerial pay is principally an emotional one.

How to handle the emotional dimension of the issue is far more complex and strenuous than crunching the numbers.

Even after the hefty cuts, the issue will remain controversial because it has become highly politicised.

The more it is politicised, the more will we perpetuate a vicious circle of criticism and recrimination.
At some point, Singaporeans should stop and consider the bigger picture.

If we focus too much on certain trees, we may lose sight of the well-being of the forest.

Ng Ya Ken
ST Forum, 6 Jan 2012

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