Ministerial Salaries Review debate in Parliament - Day 1 - 16 Jan 2012

Passion alone not enough to run country well: DPM Teo Chee Hean
One must also have the abilities and skills expected of a minister
By Li Xueying, The Straits Times, 17 Jan 2012

DEPUTY Prime Minister Teo Chee Hean yesterday defended linking ministerial salaries to Singapore's top 1,000 earners, a benchmark that has come in for some criticism even though the political pay package would take a 40 per cent discount.

He told Parliament that these private-sector high-fliers earn at least $1.3 million a year and hold leadership positions in diverse industries.

Inland Revenue Authority of Singapore (Iras) records show that 474 hold senior management posts including as chief executive and president, in sectors ranging from manufacturing and communication to real estate, health care and hospitality.

Another 383 are from the financial industry and include bankers, traders and asset managers. Professionals - lawyers, accountants, doctors and engineers - account for the remaining 143.

Mr Teo said these are 'the kind of professions and positions that able Singaporeans in their late 30s or early 40s would be in, or would aspire to within a few more years'.



This group also shows the multi-faceted abilities and skills that a minister is expected to have.

At the top of the list: the motivation to serve people. But 'having a passion for public service is not in itself sufficient to run a country well', he said.

'We therefore want people not only with a sense of public service, but who also have many other qualities: organisational and leadership capabilities, capacity to handle multiple responsibilities, ability to solve problems and take charge in a crisis, and the ability to hold their own with world leaders and further Singapore's interests.'

He acknowledged a criticism of the salary benchmark, that it is not just those from the pool of 1,000 who meet these criteria.

'Indeed, many top earners may have the competencies but not the sense of public mission,' he said.

'But looking at the responsibilities of the jobs that these 1,000 hold, we agree... that this is a reasonable level that reflects the quality and abilities of people that Singapore seeks to, indeed needs to, bring in as ministers for continued good government.'

In his 45-minute speech urging the House to adopt the proposals of the Committee to Review Ministerial Salaries, Mr Teo carefully marshalled charts of data and addressed various concerns over the new formula.

But he also conceded that there was 'no perfectly right answer to this complex issue' - one that has been controversial for more than three decades.

'It is ultimately a judgment call,' he told the packed House, which included former prime minister Lee Kuan Yew.

He laid out the two considerations that had to be weighed. On one hand, to provide a 'continuing connection between ministerial salaries and the well-being and overall progress of Singaporeans'.

On the other, the need to set salaries at a level which would not deter able and committed people from serving.

The eight-member committee led by retired accountant Gerard Ee had made fair and balanced recommendations which were an improvement to the previous salary framework, said Mr Teo.

The new formula - which continues to peg ministers' salaries to private-sector top-earners but to a wider pool of 1,000 instead of 48 - slashes ministers' pay packages by about a third.

The GDP Bonus which was pegged solely to gross domestic product has been replaced with a National Bonus pegged to GDP and three other macro-economic indicators that better reflect the well-being of the average and poorer Singaporean.

Pensions have also been removed.

Where previously a new minister would earn around $1.58 million in his total annual package, he will now get around $1.1 million, or significantly less if he does not receive variable bonuses which are not guaranteed.

Urging Singaporeans to look at the bigger picture, Mr Teo said Singapore progressed to where it is today because of a 'committed Government made up of capable, honest leaders working in concerted effort with our people'.

He added: 'I do appreciate that many may still feel that $1.1 million is a very high figure. But I hope you will also see it from the point of view of a person possessing these qualities and the passion to serve the country.'

If the salary discount is very deep, such a person in the prime of his life may decide - for personal or family reasons - to postpone entering politics. That would mean a smaller pool from which to draw political talent.

'This will weaken the depth and breadth of the leadership team and would not be a good outcome for Singapore,' he said.

Three hours of debate followed his speech, featuring nine People's Action Party (PAP) MPs and two from the Workers' Party.

There was consensus that the review was a step in the right direction. All also agreed on the key principles as laid out by the committee - salaries should be competitive; reflect a public service ethos; and be based on a clean wage system with no hidden perks.

But on how they should be put into practice, opinions were mixed, as reflected not only in the exchanges between PAP and opposition MPs, but even in views from within PAP ranks.

Ms Denise Phua (Moulmein-Kallang GRC) noted wryly that the mixed reactions were reminiscent of the tale of the elephant and the six blind men:

'Each man described the animal according to the part of the elephant they are touching... and all men disputed loud and long.'

Minister's pay not automatically $1.1 million

That amount is only in 'normal' year with good individual performance, stresses DPM Teo
By Cai Haoxiang, The Straits Times, 17 Jan 2012

SOME points about ministerial pay are still not fully appreciated, Deputy Prime Minister Teo Chee Hean said yesterday as he set out to make things clearer.

First, the benchmark $1.1 million total annual pay package does not apply automatically to all new ministers.

That amount - pegged to the median income of the top 1,000 earners, less 40 per cent - assumes a 20-month pay package, including a bonus of seven months' pay which would happen only in a 'normal' year, with good individual performance.

A minister's basic annual pay - 12 months of salary plus a 13th month annual wage supplement - would be $715,000. His monthly pay would be $55,000.

The additional $385,000 needed to reach $1.1 million will have to come from additional bonuses which are not guaranteed. These are: one month of the Annual Variable Component, three months of individual performance bonuses as decided by the Prime Minister, and three months of the National Bonus which depend on meeting various targets related to the well-being of Singaporeans.

In a bad year, a minister's total annual salary would fall because targets for the National Bonus would not be met.

Mr Teo said this is similar to how ministerial salaries went down previously during periods of slow or negative growth.

In years when there was an economic downturn, such as 2002, 2003 and 2009, ministerial salaries had also been cut.

The new benchmark salary will fluctuate yearly depending on market conditions and will be updated and published annually by the Public Service Division.

People are also not aware that every salary grade in the new pay scheme has a range - 10 per cent above and below the mid-point. This is human resource practice in both the public and private sectors in Singapore, Mr Teo said.

For ministers at the MR4 grade, the starting pay can be even lower, at 15 per cent below the benchmark point.

This will mean a monthly pay of $46,750, or a basic 13-month pay of $607,750. The total annual package of 20 months would be $935,000.

Mr Teo said the Prime Minister could appoint a minister below the MR4 grade, as with the current practice of appointing an Acting Minister on the Senior Minister of State grade.

This allows the Prime Minister to test and assess a new minister before deciding whether to give him heavier responsibilities and put him on a higher monthly salary or grade.

'This will help address concerns that new ministers who were drawing lower salaries in their previous jobs will see huge salary gains by joining politics,' he said.

It's the principles behind the numbers that matter: DPM Teo

By Teo Wan Gek, The Straits Times, 17 Jan 2012

IN THE heat of debate, the hot issue of ministerial pay is far from a numbers game.

What's more important is not the actual figures the review committee on ministerial pay comes up with, but the key principles it has distilled from its long deliberations on how the salaries should be determined, said Deputy Prime Minister Teo Chee Hean yesterday.

He made the point when he tabled a motion for Parliament to endorse the recommendations of the Committee to Review Ministerial Salaries.

Salaries 'tend to be complex and emotive issues', and ultimately, the technical details are not the most important points of debate, he said.

'What is most critical, is the emphasis that Singaporeans place on having a system that will help us to bring in a steady stream of the most committed and able people to ensure the future of Singapore and Singaporeans,' he added.

The key principles that will guide the salary framework are therefore paramount, Mr Teo said as he elaborated on them.

One, salaries must be competitive so that people of the right calibre are not deterred from stepping forward to lead the country.

Two, the ethos of political service entails making sacrifices and hence there should be a discount in the pay formula.

Three, there should be a clean wage with no hidden perks.

These three principles will also take into account the difficult balance to be made between two considerations, Mr Teo said.

'On one hand, we are clear that political service is first and foremost about service to the people.

'But we also need to have salaries at a level that will not deter able persons from devoting the prime of their lives to political office, so that we can maximise the pool of people whom we can draw on to form the future leadership for Singapore.'

There is no perfect correct answer to this complex issue, he added.

'It is ultimately a judgment call.'

Mr Teo stressed that capable and competent political leadership and good governance were critical in getting Singapore to where it is today.

As a small, multi-ethnic country in a volatile region and facing the full force of global competition, Singapore's challenges are complex and many, he said.

'We are a city-state which is critically dependent on good governance to survive, sustain ourselves and achieve success. Hence the high importance we must place on getting the best possible leadership from our small population for Singapore, more so than in other countries.'

In striking the fine balance between the ethos of political service and the ability to ensure a steady stream of people, Mr Teo said the most important criterion for anyone seeking political office is the motivation to serve the nation and its people.

'We want people who have their heart in the right place, who can empathise with Singaporeans from all walks of life, who want to contribute to the betterment of Singapore and Singaporeans.

'This has been, and should always be, the important basic requirement for any Member of Parliament or minister.'

He also said the Government will continue to adhere to the clean wage principle recommended by the committee to ensure there are no hidden perks.

This is because it believes the approach is the 'more open, transparent and honest way'.

The Government respects Singaporeans, and does not attempt to hide any perks or benefits from them, said Mr Teo.

He also urged Singaporeans to take a step back and look at the bigger picture - at what the Government was trying to achieve.

Singapore's progress today is due to a committed Government made up of capable and honest leaders, working in concerted effort with Singaporeans, he said.

'While we may have different views or suggestions on how to achieve this, I believe that we are all united in wanting to have in place a framework that will help ensure Singapore continues to have capable and committed leadership not just for today, but for the long term,' he added.

Why pay was not benchmarked to that of foreign leaders

By Teo Wan Gek, The Straits Times, 17 Jan 2012

DEPUTY Prime Minister Teo Chee Hean yesterday shed more light on why other benchmarks for ministerial pay were rejected.

Although the Committee to Review Ministerial Salaries had rejected four benchmarks, Mr Teo highlighted only two of them as he dwelt at length on the reasons for tossing them out.

One is to benchmark the pay of Singapore's political office-holders to that of foreign leaders.

The other is to peg the pay to a multiple of the Singaporean median income, or to the bottom one-fifth of Singaporean income earners.

He set out the reasons in Parliament when moving a motion to endorse a review committee's report on ministerial pay as the basis for setting the salaries of political appointment holders.

Released on Jan 4, the report recommended pegging ministerial pay to the median income of the top 1,000 Singaporean earners, with a 40 per cent discount.

As this is the middle value, not the average, it will not change even if the salaries of the top 499 people rise.

One drawback in using the pay of foreign leaders, said Mr Teo, is that political pay levels and structures based on domestic political considerations in one country may not correlate with the conditions in another.

Also, there are 'fundamental differences between Singapore and many other countries, including the size and make-up of the population, and the philosophy of governance'.

Capable and competent political leadership and good governance have been critical in Singapore's progress, he added.

Another challenge is the smaller pool of able people that Singapore has for assembling a Cabinet, compared to countries such as Britain or Japan where the population is 10 or 20 times that of Singapore's.

'Our ratio of resources and land to population is also less generous than other successful countries with similar-sized populations, like Norway, which on a per-capita basis, is the world's largest producer of oil and natural gas outside the Middle East,' Mr Teo said.

Singapore, unlike the smaller European countries, also does not have the cushion of the European Union, he added.

For these reasons, Mr Teo argued that it is more apt to benchmark and structure political salaries in Singapore based on local factors, as salaries can then be linked to its economic and social conditions, such as employment level and incomes of Singapore citizens.

Mr Teo also pointed out that many countries do not adopt a clean wage policy for their political leaders, who may receive a long list of perks.

Some of the perks and benefits that they enjoy are not even made known or measurable, added Mr Teo.

So, their salaries may look a lot smaller than their actual total compensation, he said.

As for pegging the pay to a multiple of median income or the bottom one-fifth of Singaporean income earners, Mr Teo said such a benchmark would not cover the entire spectrum of work a government is responsible for.

If benchmarked against the income of a specified percentile, it would be problematic to find a good basis for choosing a specific multiple of that income to set salaries.

A separate set of reasons would have to be given to explain why that particular multiple is appropriate, said Mr Teo.

In contrast, the committee's recommended benchmark has a reasonable basis as it has a direct link to the salaries of those with comparable abilities and skills and who may be suited for political office.

But in recognition of the importance of making a link with the well-being of the man-in-the-street, and also lower-income Singaporeans, the committee recommended the National Bonus.

The National Bonus will establish a more direct link to the socio-economic progress of ordinary Singaporeans, said Mr Teo.

Pointing to its indicators, he noted that they go beyond economic growth to include the real median income growth rate of the average Singaporean, the real income growth of the bottom one-fifth of Singaporean income earners and unemployment rate of Singaporeans.

MPs favour clean wage system
Scheme with no hidden perks or benefits would be transparent, they say

By Tessa Wong, The Straits Times, 17 Jan 2012

SEVERAL MPs spoke in favour of the clean wage system during yesterday's parliamentary debate on ministerial salaries.

They lauded a system with no hidden perks or benefits for political officeholders, saying it would be transparent.

Mr Arthur Fong (West Coast GRC) pointed out that a system with hidden perks would erode the public's trust in their leaders and public servants.

He noted that in China, public servants are paid relatively low salaries and that most of his Chinese friends are unaware of how much their leaders are paid.

Recently, a Chinese public official was spotted wearing a Swiss watch costing about 400,000 yuan (S$82,000).

This, said Mr Fong, prompted Chinese netizens to question how the official could afford it, as he reportedly draws a monthly salary of only 12,000 yuan.

'If this happens to us here, if there is no confidence in the integrity of our political leaders and public servants, Singapore would be poorer,' he said.

Ms Lee Bee Wah (Nee Soon GRC) noted that having low political wages with hidden perks has led to politicians in other countries abusing their benefits and accepting bribes.

'Look at the stories about politicians who misused their entitlement to make expense claims unrelated to public office. Look at the many scandals that reverberated across some countries of Mr Kick-backs and Mr Fix-its,' she said.

'Singapore is definitely not the place for corrupt politicians. My friends in Malaysia always tell me that they would rather have our ministers with our salary scale, than what they are having. They see value for money,' added the former Malaysian, who came to Singapore at the age of 20.

Dr Lam Pin Min (Sengkang West) called for paying ministers a fair and clean wage.

He likened the job of a minister to that of a gardener tending an apple tree.

'In tending to the apple tree, do we pay him low wages, that he is forced to take the apples from the tree and sell them? Or should we pay the gardener fair wages... such that he is not tempted to take from the tree but instead would freely share the fruits of his labour with others?' he asked.

Both Dr Lam and Mr Inderjit Singh (Ang Mo Kio GRC) pointed out that because other countries do not practise a clean wage system, it would not be fair to compare the salaries of their political leaders to those in Singapore.

Referring to the Workers' Party's proposal to follow 12 other countries in pegging ministerial pay to MPs' salaries, which are in turn pegged to senior civil servants' pay, Mr Singh noted that most of those 12 countries give extra perks and allowances to their MPs.

In Japan, MPs and ministers get to rent a house in a prime district at about one-fifth of the market value, on top of medical and housing allowances, he said.

British ministers receive their ministerial salary, their MP allowance and 'a whole slew of other allowances' to pay for staff, communications, IT equipment, and London accommodation. They also get pensions, chauffeur-driven cars and medical benefits.

By his calculations, the total pay package for a British minister could work out to £411,000 (S$813,000). 'So I don't think paying our ministers what we pay is overly high,' said Mr Singh.

But Ms Denise Phua (Moulmein-Kallang GRC) warned against taking the clean wage system too far.

She said it is 'a little ludicrous' that dental benefits and outpatient subsidy for ministers are capped at $70 and $350 a year respectively.

'Consider the provision of common benefits such as car and annual health screening packages that are typically provided to executives. Do not over-extend the application of the principle of clean wage so far that it becomes artificial,' she said.

Speaker and deputies agree to accept pay cut

SPEAKER of Parliament Michael Palmer and Deputy Speakers Charles Chong and Seah Kian Peng have agreed to adopt the new pay recommended by the Committee to Review Ministerial Salaries.

Likewise, former speaker Abdullah Tarmugi and former deputy speakers Matthias Yao and Indranee Rajah.

The recommended salaries, which Prime Minister Lee Hsien Loong had said the Government intended to accept, would be backdated to May 21 last year, the day the new Government took office.

As for President Tony Tan Keng Yam and former president SR Nathan, both had volunteered to accept the new salary.

President Tan said he would adopt it from Sept 1 last year when he took office.

His move is voluntary because under the Constitution, the President in office must agree before Parliament can change the Civil List.

The President's salary is provided for in the Civil List, which the Constitution states 'shall not be diminished during the continuance in office of the President'.

As President Tan took office on Sept 1 last year after the presidential election in August, Parliament can amend the Civil List only with his agreement, which he has granted.

Mr Nathan volunteered to move to the new framework from last May 21, like all other political appointment holders, although Mr Lee had said the revised pay for the President would come into effect when the new elected President takes office, which was on Sept 1.

The committee, in a report released on Jan4, had recommended that the President's pay be cut by 51 per cent to $1.54million.

The annual pay of the Speaker will be halved to $550,000. He was paid $1.17 million in 2010.

Cuts of 15 per cent have been suggested for the Deputy Speakers, who cover the Speaker's functions when he is not available.

This works out to $82,500, about 15 per cent less than the 2010 allowance of $96,500.

Pay ministers five times an MP's allowance: Workers' Party
By Janice Heng, The Straits Times, 17 Jan 2012

A MINISTER is first and foremost an MP, and setting pay for ministers should be based on that principle, said Workers' Party MP Chen Show Mao yesterday.

'The Cabinet is the constitutional extension of Parliament and the institutional expression of the legislature's control over the executive. It is not an extension of the private sector,' said Mr Chen.

The first WP MP to join the debate on the recommendations of the Committee to Review Ministerial Salaries, he also unveiled more details of his party's views on what MPs and ministers should be paid.

The WP recommends that the allowance for MPs should be the starting monthly pay of a senior civil servant outside the elite Administrative Service - for instance, that of a director in the MX9 grade in the Management Executive Scheme, which is $11,000.

A minister, Mr Chen said, should be paid five times this amount, or $55,000 a month.

The review committee's respective recommendations are $13,750 a month with a 14-month package, and $55,000 a month with a 20-month package.

As for the Prime Minister, the WP recommends that he gets nine times an MP's pay, or $99,000 - compared with the $110,000 recommended by the review committee.

Because political service starts with election as parliamentary representatives of the people, the MP allowance should be the starting point, said Mr Chen.

This approach 'expresses the fact that ministers are, first and foremost, elected as MPs to serve and represent the people', he said.

Though it is 'ultimately a judgment call', the proposed multipliers are 'based on the increased responsibilities and additional capabilities and experience required of the different political offices in Singapore', said Mr Chen.

As civil service salaries are aligned with 'general market conditions faced by Singaporean workers', the WP's proposal means that MPs' allowances and ministerial salaries will move with the income levels of 'many more Singaporeans' than those of just the top 1,000, he added.

Mr Chen began his speech by noting that the committee's recommendations are 'a step in the right direction'.

The WP agrees with the committee's three principles of competitive salaries, political service as a calling, and transparent wages.

But Mr Chen charged that the committee's recommended benchmark, which links ministerial pay to that of the 1,000 top-earning Singaporeans, but at a 40 per cent discount, was reached by placing the principle of competitive salaries 'as the first principle ahead of political service'.

Instead, 'the principle of political service should come first and not be treated as a discount factor', he argued.

The WP also proposed that ministers should receive no more than five months' pay in bonuses in any year, or on average three months a year.

This is less than the maximum of 13.5 months or average of seven months recommended by the committee.

Bonuses are meant to motivate workers to perform well, especially if their base salary is not high, WP Non-Constituency MP Gerald Giam said in his own speech shortly after Mr Chen's.

A monthly salary of $55,000 puts an entry-level minister among the highest earners in Singapore, leaving little need for a large bonus, he said.

More importantly, ministers should not need such incentives, Mr Giam said, adding that bonuses for political leaders are 'largely unheard of in the rest of the developed world'.



Only one country out of the 12 that the WP studied - Japan - has such bonuses. Its prime minister received a bonus of 2.6 months in 2011, he said.

Mr Giam further disagreed with bonuses of as high as seven months 'for simply meeting targets', as large bonuses should be for exceeding expectations.

'If all targets are just met, the payment should be about three months.'

As for the composition of bonuses, Mr Giam proposed that the National Bonus be at least two-thirds of variable pay.

The individual Performance Bonus should make up the remaining third - and should also be more transparent, he said.

He proposed that the Performance Bonus be based on the achievement of key performance indicators, set for each ministry at the start of a new term of government.

Said Mr Giam: 'These KPIs and their targets should be made public, and they should be aligned to the goals that the Government sets out at the opening of Parliament.'

Finally, Mr Giam suggested that a portion of bonuses be deferred. In his proposed 'bonus bank' system, only part of the bonus is paid at the end of each year. The rest goes into a separate account.

If performance is good in subsequent years, the balance in that account grows. If performance is bad, there is a 'claw back' of some of the amount.

Ministers would receive the bonus bank balance at the end of a term of government.

'This would help ensure that ministers always carefully consider the longer-term consequences of their policy decisions,' said Mr Giam.


Serving is a privilege, not a sacrifice

'If the new benchmark is accepted by the Government, it would continue to send the message, to potential political office-holders and the people of Singapore alike, that top pay is the benchmark by which the importance of the office is to be judged, and that the value of political office can, in the final analysis, be monetised. It cannot be. Not even at the highest income levels.

Political service is a calling; it is a privilege accorded by the electorate to serve the largest number of our fellow Singaporeans. It is primarily a privilege, not primarily a burden or sacrifice...

We must remember that in our system of government, ministers are first of all MPs elected by the people as their representatives. Not (first) selected by the Prime Minister from the private sector into the Cabinet, and then also MPs.

Parliament is the highest authority in our system of government, and MPs, as elected representatives of the people, should be the starting point for the determination of ministerial salary. The committee's benchmark to the private sector clouds this fact.' - Aljunied GRC MP Chen Show Mao

Corporate peg to pay draws lively debate
Some find benchmark elitist, others say it is just a way to pitch at desired level of talent

By Rachel Chang, The Straits Times, 17 Jan 2012

THE principle of pegging political salaries to top Singaporean earners in the private sector remained a bone of contention among some MPs yesterday.

On the first day of parliamentary debate on recommendations to change the way political salaries are derived, several criticised such a benchmark for being elitist. But others countered that it was merely a way to pitch at the desired level of talent wanted in Government.

Ms Denise Phua (Moulmein-Kallang GRC) said that linking pay to this small pool, which represents only 0.05 per cent of the two-million-strong workforce, is 'arbitrary and smacks of elitism'.

Currently, pay is derived from the median income of the top eight earners from six professions, with a one-third discount.

The new proposal, from an eight-man committee that studied the issue over the last seven months, pegs it to the top 1,000 earners who are Singapore citizens, with a 40 per cent discount.

Ms Phua suggested a wider peg to the top 10 or 20 per cent of earners, which she said would be more acceptable to Singaporeans.

But Minister of State for Finance and Transport Josephine Teo (Bishan-Toa Payoh GRC) countered that the 'elitist' label was incorrect: 'By itself, the peg says nothing about the value and importance of people at whatever level of income. It makes no value judgment at all.'

The former head of human resources at the Economic Development Board and the Agency for Science, Technology & Research (A*star) said that the right way to think about the peg is:

'Wouldn't we like to draw our political leadership from that level of the population? That is how sound HR practitioners think about salaries too. Peg at the level you want to draw people from.'

She said that it would be possible to peg political pay to the median income of the top 10,000 or the top 100,000 earners, but by doing so, 'we are also expressing the view that it is good enough for Singapore to draw from those levels for our political leadership. Singaporeans will have to decide if that is so'.

There would be no lack of people to fill Parliament or the Cabinet at those salaries, she emphasised. 'The question is whether we will be satisfied with that selection.'

The two Workers' Party MPs who rose to speak on the issue yesterday - Aljunied GRC's Chen Show Mao and Non-Constituency MP Gerald Giam - also took aim at the peg to top earners.

Such a peg evinced a flawed ordering of priorities, and placed competitive salary as the 'first principle' ahead of political service, Mr Chen said.

It sends the message that the value of public office can be monetised, he added.

Mr Giam said that in maintaining a peg to top earners, albeit a wider pool of them than before, the new benchmark represents 'no significant shift' from the previous, controversial formula.

The move embeds a number of 'questionable assumptions', he said, including that ministerial talent should be parachuted in from the top echelons of the private sector, and that they are 'reluctant politicians... and must be coaxed with monetary incentives'.

But several People's Action Party MPs argued that other pay benchmarks are more flawed. Dr Lam Pin Min (Sengkang West) rejected a popular suggestion to peg ministerial pay to a multiple of the bottom 10 or 20 per cent of Singaporean income earners.

'Ministers should be concerned with the well-being of all Singaporeans, rather than just lower-income Singaporeans,' he said. 'They should be concerned for the well-being of all in the nation, and should not focus just on growing the lives and wealth of the poor.'

The innate contentiousness of any benchmark led Mr Inderjit Singh (Ang Mo Kio GRC) to repeat a call to scrap it altogether - a longstanding position of his.

'Whatever formula we suggest, we will face similar questions,' he said.

Since a perfect benchmark may never be found, he suggested fixing the base salary which the review committee has come up with - a starting pay of about $55,000 a month - from now on.

Changes should be made only in each new 'era', he said.

Pointing to the fact that the WP, using a different way of deriving pay, has settled on more or less the same base salary number, he said this supported his stance on doing away with the benchmark.

'The Government and the Opposition have agreed that we have a good base. The Prime Minister should use this as a basis from now on, and not be caught in a benchmarking exercise that can be quite emotional.'

Should civil servants be paid more than ministers?
By Andrea Ong, The Straits Times, 17 Jan 2012

THE parallel between civil servants and political appointment holders - and the wages both groups of people receive - was a topic that divided MPs yesterday.

Some were in favour of changing civil servants' salary structure, following the pay cuts recommended by the Committee to Review Ministerial Salaries. Others, however, felt that a political calling is different from a civil service career.

The contention arose because the committee had reviewed political salaries independently of civil service pay - the first time both were delinked.

Also, its recommendations will mean ministers could receive a lower salary than top civil servants in the elite Administrative Service.

Before the review, ministers' pay rose in tandem with the Administrative Service and the salaries of both groups are pegged to top private-sector earners.

Yesterday, Deputy Prime Minister Teo Chee Hean said the Government agreed with the committee's view that 'the element of significant discount or sacrifice expected of political appointment holders' should not apply to civil servants and other statutory and judicial appointment holders.

'They are professionals and hence should not be subject to the same degree of sacrifice as political appointment holders,' said DPM Teo, who oversees the civil service.

He has asked the Public Service Division to study how relevant principles from the committee's proposals could be applied to the civil service.

Two People's Action Party MPs - Minister of State for Health Amy Khor and Mr Zaqy Mohamad (Chua Chu Kang GRC) - agreed with DPM Teo that political service should require greater sacrifice than public service.

This is why the Workers' Party proposal to peg MPs' allowance to civil servants' pay is flawed, they said.

Civil servants are executives and should be paid competitive wages, said Mr Zaqy.

Added Dr Khor (Hong Kah North): 'Political service is more than public service. Civil servants are not subject to the votes of citizens nor do they need to carry the ground in policy-making.'

Mr Zaqy, however, wants the civil service to adopt the proposed National Bonus and scrap that component in the current bonus which is tied to Singapore's economic growth.

The new National Bonus is tied to additional indicators that measure real income growth of the median and the poorest 20 per cent of Singaporean earners as well as unemployment.

Applying National Bonus to civil servants would encourage them to be more connected to the people and in tune with the Government's emphases on bridging the income gap and helping Singaporeans find employment, said Mr Zaqy.

Ms Denise Phua (Moulmein-Kallang GRC) asked for an independent review of the Administrative Service, which includes permanent secretaries who head the ministries.

The committee's recommendations could see these top civil servants getting higher pay packages than their ministers as well as pensions, which ministers will no longer get.

She called for greater transparency in the Administrative Service: 'If private firms and charities are expected to disclose the highest-paid executives and their salary bands, there is no reason why there should be a cloak of secrecy over the Admin Service incumbents.'

Pay review both half full and half empty, says Denise Phua
By Andrea Ong, The Straits Times, 17 Jan 2012

PENSIVELY holding up a glass of water as she spoke, Ms Denise Phua (Moulmein-Kallang GRC) compared it to people's mixed feelings over the proposals by the Committee to Review Ministerial Salaries.

'Some of us optimists will declare (the glass) is half-full. Others who are less positive will say it is half-empty. The cynics among us will wonder who drank the other half. I say it is both - half-full and half-empty,' said the backbencher.



Expressing some of the strongest reservations among the PAP MPs who spoke yesterday, Ms Phua nonetheless praised the committee for moving in the right direction with its bold pay cuts.

She was 'heartened', too, that her recommendations from the April 2007 debate on ministerial pay had been applied in the review.

These include setting up an independent pay review committee for the first time and expanding a bonus component to include targets beyond Singapore's economic growth.

However, Ms Phua had five suggestions on how the new system could be refined to 'further fill up the glass'.

Peg ministers' pay to a broader base of Singaporean workers and discard the discount signifying public service.

The committee proposed pegging an entry-level minister's pay to the top 1,000 Singaporean income earners, who form only 0.05 per cent of a workforce of two million, said Ms Phua.

This benchmark, while more reasonable than the previous base of 48 top earners, is 'arbitrary and smacks of elitism', she said.

The 40 per cent discount on the benchmark - signifying the sacrifice when entering public service - should also be scrapped as it is also arbitrary and often forgotten and unappreciated, she added.

Instead, ministers' pay could be pegged to a simpler benchmark, like the top 10 or 20 per cent of Singaporean income earners, said Ms Phua.

Strengthen the link between ministers' variable pay and their performance

This could be done firstly by removing the annual variable component - a bonus paid to all civil servants - from the variable portion of ministers' salaries.

The remaining two parts - performance bonus and national bonus - are tied directly to how individual ministers perform and how the country fares under the Cabinet's stewardship, said Ms Phua.

But both bonuses can be improved. The four national bonus indicators could be expanded to take into account factors like social well-being, she said.

The key performance indicators of each minister's portfolio should be publicised so Singaporeans can better understand how the performance bonus is awarded, she added. The call was also made by Non-Constituency MP Gerald Giam.

Review the current benefits package

Ms Phua suggested offering ministers benefits commonly given to private sector top executives, such as car allowances and annual health screenings.

Ministers get dental benefits of $70 a year and outpatient subsidies capped at $350 a year, which is 'a little ludicrous'. Said Ms Phua: 'Do not over-extend the application of the principle of 'clean wage' so far that it becomes artificial.'

Educate people on the job scope of MPs and political office holders

Both Ms Phua and Mr Zaqy Mohamad (Chua Chu Kang GRC) felt there should be greater clarity on MPs' duties and the different roles played by office-holders such as Ministers and the Speaker.

People's lack of awareness underlies the unhappiness over political salaries, she said.

Review the pay structure of the elite Administrative Service, which is pegged on a similar salary band as ministers

However, she acknowledged that today's political culture made it more challenging to attract people with the right character and skills to enter politics.

Leaders must be 'superhero politicians' who can inspire Singaporeans, engage constituents online and in person, and solve complex challenges.

But she urged the House to heal the national divide by giving ideas on how to improve the pay issue and create a dream 'so compelling that more leaders with both character and competence will come forward to serve, come what pay'.

Temper idealism with realism
Chua Chu Kang GRC MP Alvin Yeo, a lawyer with WongPartnership, spoke passionately about how Singapore must choose its own political remuneration system

IT IS certainly fashionable now to lay into this whole topic of minister's pay, to attack perceived 'fat cat' salaries and decry the loss of the spirit of public service that was the hallmark of our pioneer leaders.

But amidst the cacophony of sound, it is essential that we maintain a level-headed perspective about this debate, to temper idealism with realism, to remember that nothing exists in a vacuum (least of all, our country), to strike a balance between the ethos of public service and the need to attract and retain talent in our leadership.

One of the sub-plots that has drawn considerable comment is the benchmark adopted by the committee - the median income of the top 1,000 citizen earners, less 40 per cent. It is criticised by some to be elitist, there's no relation to the lot of the common Singaporean, and likens public office with the profit-driven occupations of commercial enterprise.

Far better, it is said, to peg salaries to the median income of all Singaporeans, or of the lowest 20 per cent - and now with the latest proposal by the Workers' Party, to that of senior civil servants - and then apply a suitable multiple to that figure.

I feel that much of this criticism overlooks what the committee was trying to achieve. The committee was not seeking to monetise the value of public service or to treat the Cabinet as an extension of the private sector, as the honourable member for Aljunied Mr Chen Show Mao has alleged.

Rather the committee was looking at the talent pool among Singaporeans, from whom the Government would seek to draw its future leaders. It is true that income-earning capacity, just as academic qualifications and lofty positions in corporations, are not a conclusive determinant of the qualities to be a leader. That is where the ethos of public service comes in, and what the 40 per cent discount was meant to address. But make no mistake, our citizens demand top performance from our ministers, who in turn are drawn from what is considered to be the likely pool of top performers.

Purely by way of illustration, there was considerable excitement in political circles when Mr Chen Show Mao himself threw his hat in the political ring. This was not because Mr Chen was considered to be a 'median-income' sort of guy, or somehow an emblem of the lowest income quintile of society. But rather, with his sterling qualifications and his position then as a partner in a international law firm, he was proof that opposition parties could also attract the sort of top talent, that one day perhaps may form the Government.



What about the other suggested benchmark of median income, which is then multiplied by a 'reasonable' number?

The first issue is how you derive this multiple - is it five times, 10 times, or 20 time? Whichever multiple you use will be arbitrary, and appear to be an exercise in backward rationalisation. You work out the salary figure you want, and then you derive the multiple to get there.

The second issue is - how does this method better justify the salary as identification with the man-in-the-street? Once you apply a multiple, any multiple - five times, 10 times, 20 times - you lose that identification with the median income, and you can be equally accused of being elitist.

To me, the most significant metric that appears in the committee's report was the Mercer's figure of $2.29 million for the average pay for a CEO of a similar public-listed company. That was considered by Mercer as the closest approximation to a minister's job.

That may be so but in my view it is still not that close. The budget of a ministry runs into the billions of dollars, more than that of the typical public company. The number of employees of a ministry can be in the tens of thousands, bigger than most public companies. The impact of a minister's decisions and policies affect a far wider group than any public company.

When there is a breakdown of the MRT trains, the Transport Minister is called to account. When a portion of Orchard Road floods, the Minister for the Environment and Water Resources has to answer questions on ponding and pumps.

No one is complaining about this - that is the nature of public office. But if the closest approximation of a minister's job, which is still less onerous than that of a minister, pays $2.29 million, and the Committee's recommendation would mean that a minister earns less than 50 per cent of that, is that a not a reasonable balance to strike? Is that not an appropriate financial sacrifice to make for public office?

There are those who think that is not enough, that public office should not be linked with competitive salaries, even with a 40 to 50 per cent discount. I respect their view, but would caution that idealism must be tempered by pragmatism, by a sense of the world we live in.

We would all like our leaders to be not only honest, clever, hardworking, probably good-looking as well, but so public-spirited that they would take office regardless of the pay, regardless of whether they could provide sufficiently for their family, or for their own retirement. Ms Denise Phua dubbed them 'superhero politicians'. There are such people around, but are there enough for one to form a government, generation after generation?

The bulk of the population would like to earn a good living, and to earn more if they could. Does it mean that a potential leader is not public-spirited, if he or she is willing to take a pay cut but still wants to ensure a certain standard of living for their family? Or are we confining our choice of leaders to those who not only are extremely capable, but also have the disposition of religious or social workers when it comes to something as mundane as a salary? Is it wise for us to confine our pool of potential leaders to such a restrictive category?

Quite apart from that, a symbolic salary, or one that is not linked in any way to the potential income that a leader could make if he chooses a different path, brings with it other dangers. It is difficult to speak about it diplomatically, but it is well-recognised that there are many political leaders in other countries, who draw an official salary which appears very low, but are rich beyond imagination because they use their power for illicit gain.

There is a list circulating around the Internet about the 20 to 30 highest paid political leaders in the world, and all of them are from the Singapore Government, presumably to make the point against high minister salaries.

But if the list was expanded to include the 20 to 30 richest political leaders, I believe there would not be a single Singaporean minister among them.

Clearly a low or symbolic salary would not put off such persons, who see public office as the route to great riches but through indirect means. The complete opposite to the clean wage that Mr Inderjit Singh was talking about. But are these the sort of persons we want to vie for leadership positions?

Still another side effect of having salaries which are not being pegged to private sector benchmarks, even with a hefty discount, is that it tends to limit those coming forward to serve, to those who have inherited wealth or who have already made their fortune.

The United States and the United Kingdom are two countries which are acknowledged as leading democracies, with First World political systems, if not always parliaments. It has been pointed out many times that their leaders get paid less than our ministers, despite ruling over larger countries. What is sometimes overlooked is the background and composition of their leaders.

Quoting from ThisisMoney.co.uk, an article called 'The Cabinet Rich List' by Glen Owen, talking about the United Kingdom:

'It is the £60 million (S$119 million) Cabinet. David Cameron's coalition government may have adopted 'fairness' as one of its defining slogans, but his team of ministers has been drawn almost exclusively from the ranks of the financial elite - leading to accusations that politics is once again becoming the preserve of the wealthy.'

On No. 3 of the Cabinet Rich List is George Osborne, Chancellor of the Exchequer, with a net worth, which means assets less liabilities, of £4.6 million. The description is: 'The youngest Chancellor for more than a century holds a £2 million stake in his father's luxury wallpaper company, and lives in a £2 million family home in London's Notting Hill. His constituency property adds another £600,000.'

At No. 5 of the Cabinet Rich List is the Prime Minister David Cameron, with a net worth of £4 million.

The PM and his wife both come from wealthy backgrounds and enjoy substantial property assets of their own: their London home has been valued at £2.7 million and their constituency house at £1 million.

Both are in line to inherit fortunes from their parents: the combined wealth of the Camerons' parents has been put as high as £30 million.

Then at No. 12 on the list is Deputy Prime Minister Nick Clegg with a more modest net worth of £1.9 million. This is the description of his state of wealth:

'Like his coalition partner Cameron, Clegg's father made millions in the City. While Clegg Sr has an impressive international property portfolio worth several million pounds, the Lib Dem leader's own wealth comes from a £1.5m property in Putney and a constituency house in Sheffield.'

Turning to the US, citing figures from OpenSecrets.org which is published by the Centre for Responsive Politics, of the estimated net worth - again, assets less liabilities - of members of the executive:

In 2008, the Republican government contained figures such as Henry Paulson, the Secretary of the Treasury with an estimated net worth of US$125 million (S$161 million), and Dick Cheney, the vice-president, of over US$30 million. Even the President, George Bush was worth about US$9.5 million.'

In 2010, the Democratic government contained figures like Hillary Clinton, the Secretary of State with an estimated net worth of US$31 million, and William Daley of over US$28 million. Even President Barack Obama, perhaps thanks to his book sales, was worth US$7.3 million.

I do not seek to criticise these countries or their political systems. But it reinforces the view that every country must choose its own system based on its own economic conditions, social mores and particular limitations. What works for the UK and the US may not be right for Singapore. We are a small country, true, but that is precisely the challenge - how to make this little red dot, with no natural resources, small population, tiny domestic market, relevant against our giant neighbours and in this ever-changing world. All while trying to maintain our multi-ethnic, multi-religious identity.

To institute a system of remuneration that tends to draw our leaders from the saintly, the power-hungry and the already-rich, is not a course we should take. We need the best government we can find, regardless of race, religion or background, provided they have the public interest at heart.

We need a system of remuneration - not to attract candidates to public office with the promise of riches, but not to deter them either, by imposing over-large sacrifices of a financial and personal nature. The committee sets out a fair and reasonable balance between these competing requirements. We should support it and move on with the challenging task of coming up with the best policies to improve the lives of all Singaporeans.

WP plans differ little from recommendations: PAP MPs

By Janice Heng, The Straits Times, 17 Jan 2012

THE Workers' Party (WP) proposals on ministerial pay fail to improve on what the Government already intends to accept, several People's Action Party (PAP) MPs pointed out in Parliament yesterday.

Its call to peg the salaries to civil service pay results in a high base salary that is 'still market-based' - just like the recommendation it is opposing, said Mr Zaqy Mohamad (Chua Chu Kang GRC).

The WP's proposed monthly pay for an entry-level minister is $55,000, the same as the committee's figure.

But the WP also wants bonuses to be smaller, yielding a lower overall salary.

Mr Zaqy was among at least five PAP MPs who critiqued the WP's proposals in yesterday's parliamentary debate on the recommendations of the Committee to Review Ministerial Salaries.

He noted that as civil servants are executives, their pay must be competitive.

This means the WP has not managed to escape a market-based pay system.

'The difference between the proposal accepted by the PAP Government and the WP's proposal is that the latter leaves out the principle of sacrifice (and the) discounts to reflect service to the people,' he said.

Dr Amy Khor (Hong Kah North) similarly observed that as the civil service has competitive salaries, the WP approach links ministerial salaries to market pay - but in a less straightforward way.

It would be 'more transparent' to peg ministerial salaries to 'the competitive salaries that the calibre of people we are looking for in ministers earn, or have the potential to earn', said the Minister of State for Health.

And as the MP allowance is a percentage - 17.5 per cent - of an entry-level minister's salary, this means the minister's salary is already a multiple of the MP allowance, she added.

The WP had proposed that an entry- level minister's pay be five times an MP's allowance.

'I do not see how their (the WP's) proposed formula is an improvement over the committee's recommendation,' Dr Khor said.

She argued that the WP formula does not 'account for the burdens and responsibilities that come with the job'.

Political service 'is more than public service' as civil servants are not subject to the vote and do not need to 'carry the ground' in policymaking, she said.

Meanwhile, Mr Alvin Yeo (Chua Chu Kang GRC) said the review committee 'was not seeking to monetise the value of public service' - which he said was suggested by WP's Mr Chen Show Mao (Aljunied GRC).

Instead, in pegging ministerial pay to the private sector, the committee was looking at the talent pool from which the Government seeks to draw future leaders.

He acknowledged that income-earning ability, academic qualifications and lofty corporate posts do not determine 'the qualities to be a leader'.

But Singaporeans demand top performance from ministers. And ministers are in turn drawn from 'what is considered to be the likely pool of top performers'.

Mr Chen's own entry into politics illustrated this point, said Mr Yeo, when it generated 'considerable excitement in political circles'.

Such excitement 'was not because Mr Chen was considered to be a 'median-income' sort of guy, or somehow an emblem of the lowest income quintile of society', observed Mr Yeo.

Rather, with his 'sterling qualifications', Mr Chen 'was proof that opposition parties could also attract the sort of top talent, that one day perhaps may form the Government'.

The importance of talent was highlighted earlier by Senior Parliamentary Secretary (Foreign Affairs and Community Development, Youth and Sports) Sam Tan.

'Pay should not be the reason for entering politics, but neither should it be the reason for losing talent,' said Mr Tan (Radin Mas) in Mandarin.

He noted that talent is important to any successful government, but it is even more important for government to have a heart. Lacking either would spell disaster.

Stand-off

Non-Constituency MP Gerald Giam refused to be pinned down yesterday on what proposals the party had submitted to the committee to review political salaries, despite the efforts of Sembawang GRC MP Vikram Nair (right). This is an edited transcript of the exchange. 

Mr Vikram Nair: This is a very interesting proposal. I just wanted to check if the WP actually made this proposal to the committee back when the consultation was going on.

Mr Gerald Giam: We did give our suggestions to the committee, it was a face-to-face interview. Which proposal is it?

Mr Nair: The WP's new method or alternative method of calculating the salaries for office-holders.

Mr Giam: Well, we did make some of these proposals. We had to read the committee's report first before we could conclusively decide on whether we agree or not with the benchmarks. We did make a lot of the proposals that are in the paper, yes.

Mr Nair: Did you make this specific proposal on the bonus, the way it should be calculated, the claw-backs and so on, because it's a very detailed proposal you've put forward. So I'm just wondering if you let the committee consider that.

Mr Giam: Well, I can't tell you what exactly we proposed to the committee because that was under the understanding that it was something that we proposed to the committee, it wasn't something that was meant to be public.

Related
White Paper on "Salaries for a Capable and Committed Government"
Government intends to accept recommended wage cuts : PM Lee
Ministers' Salary Review Key Recommendations
Reactions to the proposed pay revision for political office-holders
Ministerial Salaries Review debate in Parliament - Day 2
Ministerial Salaries Review debate in Parliament - Day 3