CIVIL SERVICE SALARY REVISIONS

CIVIL SERVICE SALARY REVISIONS: Debate resumed.

6.27 pm

Mr Sin Boon Ann (Tampines): Madam, coming after two very forceful speakers - Minister Teo Chee Hean and Mr Shanmugam - I can only say that they presented very forceful and persuasive arguments as to why the motion standing in the name of the Minister should stand. However, I can also say that after today's debate, there is still this element of unease that remains with the public and I suspect that the underlying sense of unease is a feeling that the public service and the private sector rewards cannot similarly be compared. I feel that some comparisons may be made, but I would not think a case can be made that complete comparisons may be made.

If I may repeat, at the heart of the Government's argument lies the belief that people and talent should be adequately rewarded by money. And I agree with Mr Shanmugam that it would be naive and simplistic to assume that anyone, no matter how he loves Singapore, would be motivated to public service by ideals alone. Just how adequate and sufficient the reward should be remains the crux of the issue. So we have identified some professions and used the median income of these professions as a basis for rewarding our Ministers. The question is always: is this a fair comparison?

Some will say that it is not. For them, the main difference lies in the market discipline and the regulatory controls imposed to ensure fair market practices and consumer protection. Take the case of a CEO of a listed company. Many listed company CEOs will tell you soon enough of how the market will punish them, their company stocks particularly, if their periodic numbers are not profitable. Often, CEOs are rewarded on the basis of the financial performance and that is usually benchmarked against the bottom line or the profits of the company. In many cases, where the company is not doing well, or the company continues to bleed red ink, stock prices will more likely dive southwards and in many cases, CEOs will be told to go; which perhaps explains why many CEOs in the US, while they are paid very handsomely, do not last on the average more than five years on the job. In their case, every time the company performs badly quarter on quarter, the CEO's job is at risk. And the market knows it because of the legal requirement, in the case of listed entities, to post the results of the company's performance on a regular basis.

Or, take the case of a professional. Why is a lawyer paid the wages that he earns? Again, market discipline plays a major part in this. Would a lawyer be able to earn the kind of salary that he enjoys if he was no good? I am a lawyer, and I will be the first to tell you that if I am no good, my clients would take their custom elsewhere to other lawyers who will be eagerly standing in line to take my place. Conversely, if a lawyer is good, because he is able to solve complex legal problems, he will be paid a premium and no one would begrudge him of that.

In the case of Ministers' salaries, many would argue that it would not be fair to compare Ministers' salaries with the private sector because they are not subject to the same market discipline as the high earners in the private sector are. For goods and services, a client is free to go to another firm if he is not satisfied with what he is getting. The same, however, cannot be said of public services. Outside of general elections, there are no competing services for public policies on health, education, or transportation, for example, that would set the appropriate real time benchmark for determining the quality of the Minister's performance. Equally, in many cases, at least unlike listed companies, there is no established framework of disclosure that would help to determine the actual performance of the Ministries, the quality of the Minister's contribution to the policy process and the outcome of these policies as to its effectiveness. In the context of and the tradition of the British parliamentary democracy which we inherited, the Minister's performance is determined by the ability of the backbencher to raise questions about particular policies and the Minister's continuing stay in Cabinet would depend largely on his ability to give an account of and defend the policies of his Ministry. This is very much a hit and miss approach for which I cannot say is entirely satisfactory. Why so?

Firstly, information flow is more often guarded by secrecy than by open candour; with the consequence that unless a scandal breaks out, whether or not exposed by the media, or the Auditor-General picks up an administrative lapse, it would be difficult for the public to have a full and complete picture of the performance of the Ministry and, hence, the performance of the Minister. I do not deny that our Ministers and Ministries are excellent. However, as it stands, we do not know if they could be better; or if the Ministries are performing badly, it could be worse but for the work of the Minister and his senior civil servants.

Secondly, under the current system, the work of the Ministry is carried out by the professional civil servants who are led by the Permanent Secretary. The Minister’s role is largely political, the main thrust of which is the strategic direction and political defence of the work of the Ministry. In this regard, it is the civil servants who prepare the answers to questions raised in Parliament and often, provide answers to anticipated questions. Political appointees do not often write papers. They do not do the research, neither do they undertake the execution of policies. But they provide policy directions in a similar way that directors of a company provide the strategic thrust for the management. Above all, they take responsibility for the work of the Ministry in the same way that the Companies Act pins responsibility on directors for the failings of the company.

Very often, as in the case of companies, it is the civil servant who may bring up proposals to be endorsed by the political master. How much work, input or value add is provided by the Minister is not clearly defined in the current framework. For this reason, while the public would have no issue with the high salary given to the Permanent Secretaries and senior civil servants, they become a lot more apprehensive when it comes to Ministers. Should the Ministers therefore be remunerated for the responsibility that they take, or should they be paid by policy directions that they provide? I think the Government should be clear about this.

Madam, it has been a while since we initiated the policy of pegging Ministers' salaries to private sector salaries. How have we fared? Underlying the debate is the belief that we would be in a better position in tapping talent from the private sector, after implementing the policy proposed by the White Paper in 1994. In the current Cabinet of full Ministers, one Minister came from a bank and a surgeon came from the private practice. The rest were elevated from the civil service, having spent the most part of their careers in policy-making. With the exception of one, whose profession is not included in the list of professions used as benchmarks, their present salaries generally would have been higher than what they were earning previously.

What does it mean for us? After 14 years since we introduced the policy of pegging the Ministers' salary to the private sector, there is still no clear evidence that pegging the Ministers' salary will necessarily result in more people from the private sector being inducted into public service. The fact remains that the bulk of our Ministerial candidates continue to be drawn from the civil service; and rightly so, as these entrants would have had long years of policy experience to take on Ministerial appointments in the Cabinet. Yet, this does not mean that we do not have to pay our civil servants and Ministers well. I suppose for civil servants, it is settled principle that we should pay them well enough to keep them happy in service and for Ministers, well enough for talented and able civil servants to know that there is career and pay advancement beyond the level of the Permanent Secretary. If we can accept this as a basic principle, even in the way we apply the settled formula, I am sure we will be in a position to decide on what is a reasonable compensation for all.

The question at the end of the day, Madam, is not how much a Minister should be paid. I do not think that people mind generally that Ministers should be paid highly. The question really is whether there are sufficient and clear benchmarks that will properly determine the Minister's work and the quality of his contribution to the work of the Ministry. I believe it will be easier for the people to accept increases in the Ministers' salary if the Government is more open about the process of measuring the performance of the Minister. In past debates in this House on this topic, there have been calls, including today, in the light of Ms Denise Phua's speech, to have a more transparent process of measuring the performance of Ministers; such as perhaps having an independent body, headed by the President, to provide an independent and institutionalised process of assessing the performance of Ministers because this will help to add to the confidence of the process of fixing the wages and rewarding Ministers. I support this proposal and hope the Government will consider this.

Finally, to serve our nation is both a duty and a privilege which all Singaporeans should apply himself or herself to without hesitation. Money is an important consideration. However, it must never be at the forefront of our consideration to enter public service. High salaries as inducement for entering public service will rob the Minister and his office of the moral high ground to serve. Great names in history are often remembered for the sacrifices that were made than by the monies that they earned. Highly capable people who are not prepared to make the sacrifice should not be called to serve. In fact, in some cases, I think our country’s interest will be better served, if they remain where they are. They can be co-opted into service in other ways as this Government has often done.

Mr Ong Ah Heng (Nee Soon Central): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mdm Deputy Speaker, in 1994, during the parliamentary debate on Ministerial salaries, Minister Mentor Lee said, and I quote, "Even for Lim Kim San, Barker, Hon Sui Sen, the first generation leaders, whether they will still step forward bravely to decide today to serve in the Government and serve in politics, it is not certain." The former Deputy Prime Minister, Dr Tony Tan, said that the immediate task our Government is facing today is how to ensure that the young generation will continue to lead Singapore and to take over the Ministerial positions and bring Singapore forward.

Mdm Deputy Speaker, unless there are better alternatives, the high salary policy is the only practical measure to attract talents to serve in the Government, in Singapore's context. The day before, a report in Lianhe Zaobao pointed out that, despite having a population of 1.3 billion people, China today also faces the same problem of a shortage of leaders. In Singapore, we only have 4.5 million people; the shortage of talents is a more serious problem. Last night, the Taiwan TVBS channel reported the salary increase for the Singapore Prime Minister and compared Singapore Prime Minister's salary with their President's salary. And they hinted obliquely that Singapore PM's salary is 10 times their President's salary. I think the newscaster has probably forgotten, or perhaps she is not aware that each time their President used the presidential jet, it would cost more than a few million Taiwan dollars, or even more than 10 billion Taiwan dollars. But our Prime Minister only travels first-class on SIA. How do you compare? And also, the reporter forgot that their President has certain claims for his expenses. But our Ministers only receive one salary. So, in comparison, there are a lot of anomalies because many foreign friends do not realise that our Prime Minister and the Ministers only receive a salary and there are no other claims for entertainment expenses, special fees and other fees.

Last week, two friends from Beijing came to visit me, and I drove them around Singapore. Coincidentally, there was a Minister's car passing by. So I pointed out to my friends and said that he is one of our Ministers. He said, "Oh, your Minister is very young." And I asked, "Which one?" He replied, "The one on the front seat next to the driver." I told them, "No, that is the bodyguard. The one driving is the Minister." So the Minister has become the driver for his security officer! That would be big news in China. But that is the practical reality of Singapore. I do not think there is any other country where the Minister becomes the driver for his security officer. This reflects Singapore's own unique circumstances.

On the question of the salary increase for Ministers, what is the reaction of the citizens? I can summarise it in one sentence and the voice of the people is: "Ministers, please do not forget about us." In fact, this Government has not forgotten about the people at any time because party politics has this special feature that the power comes from the people. The governing party understands this principle and I think the Opposition party also understands this principle. The Minister for Finance, in this year's Budget said, since 2001, the Government has distributed a total of $7.5 billion, to share the fruits of success with the people. This year, the Government has set aside $4 billion to share with the people of our country. The important thing is that the bulk of this amount is spent on looking after the lower income families.

Mdm Deputy Speaker, we are a small country, we have started from scratch, to having everything today. We cannot afford to have corruption in our political regime. Otherwise, we are going to lose everything that we have. Therefore, when the Government spent $4 billion to look after the middle- and lower-income people, I fully support the increase in our Ministerial salaries and senior civil servants' salaries. And I hope that Prime Minister Lee's team will introduce more pro-people measures every year .

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*Cols. 367-368.

6.40 pm

Ms Eunice Elizabeth Olsen (Nominated Member): Mdm Deputy Speaker, thank you for allowing me to participate in this debate.

Madam, when I spoke in this House on the Integrated Resorts, I thought that that was one hotly debated topic. Now, I realise that the debate on public service pay is much more highly charged. The strange coincidence is on that day, I was also one of the last speakers in the House and I was holding everyone up from dinner, so I asked the remaining Members in this House to please bear with me.

Let me start by listing some basic premises everyone can all agree on. Firstly, civil servants and public service leaders must be compensated adequately, and wage adequacy depends on the relevant private compensation levels. I have many friends who are teachers, for example, and I know they toil very hard. They need to be given their dues.

Next, we need to cultivate a strong public service ethos in our nation so that we can have the right people with the best interests of Singapore, and enough of them to take the nation forward. For a young nation, it is an imperative to build up dedication to the nation and its institutions, such as the civil service.

Finally, Singaporeans want a good and honest Government. It is important for us to agree on all these premises, and I think we all do.

This is how I think the issue on the civil service salary revisions should be framed. However, the way this issue has played out in our national discourse has been unfortunate. The problem is in the messaging to Singaporeans. Right now, the message from the Government is that the only way to get people to serve the country, especially at the top leadership positions in political office, is to lure them with money. It may not be the message the Government intends to send out. As the Minister in charge of civil service said yesterday, "financial rewards cannot and should not be the main motivation of those in the public service". But this latter aspect has only been on the periphery of this long-standing and widely debated issue, at least, in respect to service in the top leadership positions.

As far back as 1989, the Prime Minister, then the Minister for Trade and Industry, said that the Government "will offer whatever salaries are necessary to attract and retain the talent that it needs". Madam, this has been the consistent message from the Government.

If we have to go extreme financial lengths, I, like my colleague, Mr Siew, question whether we would be getting the right people to lead this country. Running a country is not the same as running a company. As a small and young nation, we may be able to ride on the buoyancy of a good economy, but we can only be anchored by firm ideals and values. Without the anchor, we would lose our bearings. Surely then, public service motivated by passion and dedication is one of those ideals and values. Surely then, we have to cultivate and nurture this. If we focus on the financial rewards, and we design a system which emphasises this aspect, are we acting in our nation's best long-term interest?

With the latest revisions, we are told that a $1.2 million salary is not enough to build a good enough Government. $1.6 million is now needed. If Singapore's Government waxes and wanes by the dollar quantum, I think we are in trouble.

Madam, we know we can get a good and honest Government without getting into a race for the highest salaries. We need not look at Finland, Denmark and Switzerland for examples. I recently read a research paper by NUS political science lecturer, Jon Quah, that the PAP Government was only able to implement the second prong of its anti-corruption strategy, ie, the reduction of incentives for corruption by improving the salaries and working conditions in the Singapore Civil Service, in the 1980s, long after we had achieved economic growth. Although they lagged behind what would have been the commensurate market pay at that time, much more than the current gap, Singaporeans still enjoyed good governance. Although we do not want to return to that situation and we can afford to pay more now, the point is that good governance is not exponentially increased with increasing salaries. It may be helpful to bear in mind that the principle of diminishing marginal returns will set in. Beyond paying a certain amount, how much more are we improving good governance?

On the other hand, we should be concerned about the message that we are sending, especially to our youth. We should be wary about suggesting that we can buy leadership, that we can buy dedication, compassion for people and the willingness to serve. Administrative culture both reflects and influences the norms of society at large. In a small country like Singapore, where the State plays a far bigger role than in other countries, it wields greater influence in the transmission of values. We should moderate the current financial-driven approach to public service. The Government may put off people who are willing to serve out of passion. In fact, the suggestion is that the Government is only looking for individuals from the top 438 income-earners to serve, since the emphasis is on the financial sacrifices said to be involved.

Madam, it is not just about idealism, although it must still be the most important point. Sometimes, the implication of a policy or system cannot be foreseen, and there could be unforeseen dangers in the current system for Ministerial salaries. We hear continual warnings from this Government about the danger of being led by a rogue government. Madam, I agree. Precisely, when political power is coupled with immense financial power, these are the conditions that make it more likely to lead to the creation of such a government, especially if we attract people who are motivated by financial gain. We can dangle million-dollar salaries in the belief that it is the only way to get good people, but we may instead get people with ulterior motives, which are much harder to detect. As a small country, we cannot risk that. Moreover, with a system which pegs salaries at between the 24th and 25th highest earner of only six professions, I fear that it is easy for a government which chooses to do so, to enrich itself in subtle but deceitful ways, such as by providing preferential access to public resources, government contracts or favourable legislation. In the current system, it is easy for politicians to establish a close nexus of connections with just a few dozen income earners. While the current set of leaders is honest enough not to exploit this, can this be guaranteed for all future governments?

Minister Teo has pointed out, and I thank him for his explanation, the stringent criteria in selecting good people. Madam, the reason why I am still concerned is because the question is whether we are willing to take such risks. At the LKY School of Public Policy event last year, when asked if it is possible to hire foreign talent to run the country, the Minister Mentor said: "No. You must have the passion, you must have the commitment, you must share the dreams of the people." So we must always try to nurture this sense of public service and find the right ways and the right balance in attracting our future leaders. Are we in danger of casting this aspect to the periphery?

Madam, I am glad the Minister in charge of the civil service welcomes our views and ideas about the methodology for arriving at a suitable salary benchmark for Ministers, senior civil servants and directors in the Administrative Service, otherwise known as the MR4 and SR9 benchmarks. He said yesterday that there is "no perfect method" for doing these benchmarks. Madam, I humbly submit that not only is the current method less than perfect, it is flawed.

Besides the possibility of abuse, it also goes against the principle that the Minister said that our public service subscribes to - the principle that "we do not seek to lead the market, but to keep pace with it". Here is how: Salaries at the current benchmark at the MR4 grade, would rank our 18 Cabinet Ministers within the top 438 income earners. The current number of senior Permanent Secretaries in the civil service has not been reviewed, but a Straits Times' article in 2004 reported that there were eight Permanent Secretaries, some of whom were stepping down to be replaced by others. Let us say that there are 25 Ministers and senior civil servants altogether. That would mean nearly 6% of the top income earners come from the public service. But, Madam, the Singapore Civil Service, with a size of 64,000 people, represents less than 2.5% of the Singapore labour force of 2.6 million workers. If the policy is truly to ensure that public officers are paid commensurate with the private sector, and nothing more, then a better benchmark would be to peg salaries to the point at which the Ministers and senior civil servants are proportionately represented among the top jobs in the private sector. If there are 25 individuals in the MR4 grade or higher, then the benchmark should be at the 1,000th income-earner. Likewise, if the figure is 20 individuals, then the benchmark is at the 800th income-earner. It becomes a self-adjusting formula. The principle is such: 2.5% of the labour force, 2.5% of the top income earners. This upholds the principle of keeping pace with the market and not leading it. The current benchmark does not. Even the Government has not followed the benchmark more times than it has since 1994.

Madam, this should also apply to the SR9 benchmark. Depending on how many Administrative Service officers are in this salary grade, the pay package should be pegged to the point at which they are commensurately represented among the top earners aged 32. Again, the number of officers in this grade has not been revealed. But whatever the number, pegging it to the 15th income earner is completely arbitrary and definitely leads the market rather than follow it.

Madam, finally, there is one thing that puzzles me. I understand that the benchmark is meant to be reviewed every five years. The 1994 White Paper was implemented the following year and the next salary review came in 2000 and was implemented in 2001. So, given that resignation rates have been going up in the civil service since then, why did we not do the salary review in 2005? Why did we wait until now when the situation seems to be more dire? If attracting good people to serve the country is the challenge, why did we not do the salary review two years ago when the PAP Government was looking for people to stand in elections and serve the country? Perhaps the Minister can help to clarify this.

Madam, we should never downplay the capabilities of Singaporeans in their role in taking Singapore forward, in terms of the potential they have to lead the country with dedication and passion and in their contributions in tandem with the Government. They, as much as the Government, are the reason we have progressed to where we are now. Leadership that flies on the wings of passion and dedication can take the country higher than the engine of financial rewards. We will always reap what we sow.

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