EXEMPTED BUSINESS (Motion)

Mr Wong Kan Seng: Mr Speaker, Sir, under Standing Order No. 42(2), the motion for the adjournment of the House shall lapse at the moment of interruption. As the debate on the salary revision is likely to go beyond the moment of interruption, may I, therefore, seek your consent and the general assent of Members present to move to exempt the motion for adjournment of the House from the provisions of the aforesaid Standing Order.

Mr Speaker: I give my consent. Does the Minister have the general assent of Members to so move?

Hon. Members indicated assent.

Resolved,

That, notwithstanding the provisions of Standing Order No. 42(2), the motion for the adjournment shall not lapse at the moment of interruption and that the proceedings on the debate thereunder be exempted from the provisions of Standing Order No. 1. - [Mr Wong Kan Seng].

Mr Ling How Doong (Bukit Gombak): Sir, while I do not begrudge the salary revision of the civil service, I would really question the emphasis on the increase for Ministers. It would appear that we have now in a way linked the salary increment of the Ministers to that of the CEOs in the private sector. I think it is a very dangerous trend if we harp on this and move along this line, in a sense that we keep on comparing the remuneration of the CEOs with that of the Ministers. As it is now, we have difficulty getting talented men of integrity to become Ministers. What more if you start inducing this sort of idea and philosophy in them? In future, when you get Ministers joining the service, they will be thinking, "Well, I am joining the service because I expect in another four years' time there will be a salary revision, and then it will be brought in line with the private sector."

I am not begrudging, and I am not saying that the Ministers should not get the increment. But let us draw a line between the comparison for the private sector and the public sector. One must know for sure that to be in politics, it involves a sense of mission, a sense of sacrifice and a sense of dedication.

There are examples around the world that high pay would not necessarily attract talent.

BG Lee Hsien Loong: For example?

Mr Ling How Doong: In the United States, Australia, New Zealand, England. You are not saying that John Major is not a successful politician. Are you saying that? Are you saying that Paul Keating is a lousy Prime Minister? Because in these countries, the Ministers are being paid around S$20,000, and we still find every year, year in and year out, at every election, these dedicated people coming forward, giving up lucrative jobs outside, to stand for election and become Prime Ministers!

So, let us not over-emphasise and keep on comparing with CEOs all the time, because, then, you lack a sense of dedication, you lack a sense of mission. Even in Singapore, I have seen some top executives resigning their posts to go into missionary. If we ultimately get a bunch of people who think of nothing but pay which is equivalent to their performance, we are entering a very sorry state of affairs in Singapore.

Therefore, as I said earlier, I am not begrudging their increments. But let us not keep on emphasising or comparing with the CEOs, so that we will not lose sight of what politics is all about. And also as a reminder to would-be politicians that when they come in, the question of sacrifice is there, rather than you change your attitude, your philosophy in life to say, "Well, I am coming in because I expect my pay ultimately to be in line with that of the CEO." It takes away the very foundation of going into politics. As I say, look around us. So let us not emphasise this point all the time.

Let me emphasise again here. We are not begrudging that the Ministers get this amount of pay. But let us not argue on that reason alone by looking at the CEOs, how much they are getting; we must compare with them, compare with bankers, compare with all these people. No. That should not be done. Similarly, in the civil service, there are people who become teachers. Because of what? Because they love teaching.

BG Lee Hsien Loong: No need for increment?

Mr Ling How Doong: No. They love teaching. Of course, they are getting increments. What I am saying is that people go into teaching because they love teaching. But the point I am making here is: let us not emphasise by comparing with the private sector because the answer is a simple one. If you feel that you are not adequately compensated in the private sector, go into the public sector, or vice-versa. If you think that going into politics is not going to pay well, you are paid less than the people in the private sector, no one is going to stop you. Continue to be bankers, executives, and continue to be CEOs. You do not have to go into politics. It is as simple as that. The logic is there. No one is being forced to go into politics. And you must always remember one thing. The difference between people working in the public sector and the private sector - Ministers and CEOs - is simply this. There is the power, the prestige. There are people who go for power and prestige without the remuneration. There are people who do not want power and prestige, but go for the remuneration. Let us make it clear. It is as simple as that. So let us also not compare with other countries. I have already named a few, like the United States. I have already made it very clear earlier on. Let us not use the reason to say that because CEOs are paid so much, you should pay the Ministers so much. That should not be the case.

BG Lee Hsien Loong: How much will you pay?

Mr Ling How Doong: No. What I am saying is that you do not draw this comparison, because, then, you are slowly inculcating in the future generation of people to say that, "Ah! We can go into politics because, you know, the remuneration will be as good as in the private sector." You lose a sense of mission, you lose a sense of dedication. That is what I am saying.

BG Lee Hsien Loong: Mr Speaker, Sir, many points have been raised by many MPs. Let me try and group them together and give them a coherent response, both on the details, also on the facts, the rationale, and the justification for what we are doing.

First, the details. Dr Tan Cheng Bock asked what perks civil servants get, so did Encik Othman Haron, in addition to the basic salary. The answer is there are very few perks. You get your basic salary, you get your NWC allowances, same like every other employee. You get bonuses at the end of the year, like other employees. At the top, we have performance bonuses, which we have described. For Superscale D and above, we have a car allowance, which is two months tax-free. It applies to Ministers, some civil servants. And that is all. There are no houses, there are no cars, there are no maids, there are no paid holidays, there are no secret votes.

An hon. Member: No timber concessions.

BG Lee Hsien Loong: No timber concessions. Civil servants do get appointed to boards of Government-linked companies as directors. And we operate a scheme under the Directorship and Consultancy Appointments Council (DCAC) to channel a small part of the fees from these companies to these civil servants as allowances for the time and effort which they put in serving on the board and acting as Chairmen of these companies. It is administered by the PSD. Chairman, PSC, sits on the Board; PSD adjudicates. There is a formula which is worked out. There is a cap, if I am not mistaken, of about one month's pay (maximum), which can be paid out in terms of allowances to any particular civil servant. It depends what he is doing and how many companies he belongs to, big or small, and so on. It is a token for the effort which they put in.

Frankly, I think we are getting cheap labour for the performance of SIA, DBS, or Keppel. We are just getting a civil servant, and saying, "Here, as a hobby, you do this extra duty, and I give you some hongbao, pocket money, at the end." If we wanted similar people from the private sector to take on those responsibilities, I think we would be paying them several times the full wage of the civil servant.

Second, upgrading graduates in service who are already in Division II to Division I. We have studied this. There are about seven or eight thousand graduates who are already recruited into Division I. Most of them are teachers. In addition, there are one or two thousand graduates who were originally recruited in Division II, who under the new scheme would be recruited in Division I. These, we will naturally also upgrade and put on Division I.

Third, Mr Chng Hee Kok's suggestion to have regular adjustments for Superscale Officers. This is an idea which we will follow up. We have begun to do this in 1993, because in the NWC adjustment we have made two grades - one is for the Timescale Officers who have annual increments, and therefore have a smaller NWC adjustment; another figure is for the Superscale Officers who have no increment, and therefore the NWC adjustment is larger. If we do this systematically, then there will be less need for large and upsetting revisions to Superscale and political salaries every three or four years.

Mr Chng Hee Kok has also suggested having a commission to fix the pay of politicians regularly. It is an attractive idea. But I do not know if it is a practical one, because whatever the form, we are the ones who have to decide, who have to take the responsibility, and who have to come to this House and justify it, and you have to decide whether this is reasonable, underpaid, or overpaid. We can have data and commissions, but we cannot avoid the responsibility and making the judgment of what is right and what is sustainable.

Dr Kanwaljit Soin asked for higher pay rise for women. I do not think that if we concede this, we will necessarily make her happy. I think her preoccupation is a different one, and that is, medical benefits for women. I could give a full answer, but it will probably distract from the topic under discussion today. The Ministry's view, which is also the Government's view, has been fully explained in several statements and letters. I know that the Member does not accept these explanations, but I think that it is a legitimate difference in view. We have reasons for what we are doing. It is not what she thinks, that we are either saving money or it is for male chauvinism.

There are structures in society which you touch only with great caution. We have a family structure and a law in which it is the husband's responsibility, in fact, it is the father's responsibility, to look after the family and children, and it applies even if the father is unmarried to the mother. So the father must look after illegitimate children. And if he does not, we can take him to court and compel him to do so by a court order. So we will look after the women officers. Their children have to be looked after by their father. And if the father does not do his duty, he must be compelled to do so. It is not a question of equal pay, but a question of putting the responsibility where it lies.

The alternative for us is to say that fathers do not have this responsibility, and we leave it to the family to decide which one wants to carry the can. I think there are very major implications of that which will, when they have worked out, not at all be to the liking of the people who are pushing for this apparent equality in status. I will just leave it there. I know that the Member would not be satisfied, but we will complete the debate another time.

Next, medical benefits. Encik Othman Haron has asked for civil servants to be allowed to stay on the existing scheme. Mrs Yu-Foo has asked for people to be given the right to choose either the existing scheme plus existing pay, or new scheme, new pay. And I think Mr Heng Chiang Meng has asked for the same. We are prepared to do this. It must be all or nothing. This is a package which we have worked out which we think is fair to everybody. We have changed your medical benefits which you are entitled to. We have shifted more of the responsibility on to the employee. And to be quite fair, we have made a salary revision, which I think is on the generous side, which more than offsets this additional expense which you can be expected to bear.

We have also made special provision for the people who will retire under the new scheme and will be looking forward to the medical benefits, and who will not be able to benefit a great deal from the non-pensionable component of the payment which we are going to give in-service officers henceforth. I would feel some considerable sympathy for officers who would be retiring on the 2nd, 3rd, 4th and 5th January, for example, who just miss out. So for all in-service officers, if they prefer status quo, that means, existing pay, existing benefits, instead of the future arrangement, new pay, revised benefits, we would accept that. We cannot accept a rojak where you take the best from each, new pay minus a little bit, existing benefits all kept. This is a package deal. We have reasons for wanting to move. The pay is something which we have decided on unilaterally to make it overall fair to the civil servants. I think we have done it so that we have covered nearly everybody. There will be a few who will feel that they are better off without this, we will allow them to stay.

But other combinations, such as Mr Heng Chiang Meng has asked for, no, you cannot mix and match. That is not possible. The increases are for two reasons. One is to adjust to the market which we were not obliged to do. But we have decided to do now because we would like to make the package a fair one to serving civil servants. If people leave the service, we will have to revise the salaries again and we will come here and argue it again. And I am quite confident Mr Heng will support us on that occasion.

Mr Low Thia Khiang has asked how much all this will cost. I should have put it in the statement. It will cost $161 million a year in the first instance.

Dr Toh Keng Kiat has asked for health care workers to be given "hazard money". I have not heard of health care workers previously having "hazard money" as part of the package. The statistics show that while there have been incidents where people have caught AIDS from being pricked by needles, or some prevalent form of infection in the hospital which is drug-resistant, in fact, on a statistical basis, health care workers - doctors, nurses, and so on - do not get sick more often than other workers. If you have an obstetrician looking after pregnant women, you are unlikely to get pregnant by contact.

So, I think we should take the approach with health care workers as we take with the SAF and the armed services, namely, you are on your own. But if it is a service-related matter, then we will look after you. And it is quite well-defined what a service-related matter is. If you come back five years after retirement and say, "I got AIDS. I think I may have pricked my finger ten years ago." You would have difficulty in convincing a tribunal that that was, indeed, how the matter happened and why, for ten years, you forgot to tell us about it. So, I think that would meet this specific problem.

Next, Mr Low Thia Khiang wants us to have an international comparison, how much do other people get paid. Mr Ling How Doong says, "Look at the US. Look at the UK. Do they get paid more or less?" Maybe less, in cash terms. If you are the President of the United States, you have the White House, you have Air Force One, you have Camp David, you have the whole panoply of staff, of perquisites, of the President of the most powerful nation on earth. And when you retire, like Ronald Reagan, you make a promotion visit to Japan, you have a $5 million advance payment for your services.

In Britain, cited as an example of charity service, politicians who retire, write books and give lectures. Margaret Thatcher was paid o5 million in advance on her memoirs recently. I am not saying that she does not deserve it. But if you say that the only return you get from being Prime Minister of England is to live in 10, Downing Street, then you have not seen the whole story. And, as Mrs Yu-Foo has pointed out, there are many other perks and perquisites, which are not published and are hidden, when Ministers and Prime Ministers pay themselves piffling and take ceremonial pay cuts to impress the public - houses, cars, and so forth.

Do we want to operate like that? We can easily bundle that together and declare nominal incomes, and then we will provide all these on the side. I do not think that would make us better off. I think even the Opposition would agree that it is better to have a transparent system, where you pay for everything, including your COEs, your Area Licence, your car park charge for being a Member of Parliament ---

An hon. Member: $20 more this year.

BG Lee Hsien Loong: $20 more this year. Then it is for us to give you all these things for free and say, "All right, you are working in public service, noble ideals." There must be noble ideals because otherwise you should not be in this business. But there must also be a fair recognition of what the job is worth and what the person is worth, which I will come back to later.

Mr Chandra Das, Mr Walter Woon and several others have asked what the gross amounts will be after the revision because we have given the base pay and there are other components as well which the officers receive. As I mentioned just now, you get a non-pensionable annual allowance (NPAA), you get an annual variable component (AVC), you get the performance bonus (PB), some get car allowances (CA), and we also compute an imputed tax on the car allowance because the car allowance is tax free. So if you add all of that together and divide by 12 to make it comparable with the figures which I am going to show you now, this is what you will get. [Copies of Annexes (Cols. 1283 - 1290) distributed to hon. Members.] The figures are as follows. This is all-in after the revision, annual salary divided by 12, because I have given in Annex III the salaries for architects, doctors, bankers, stockbrokers, and so on, and to make it strictly comparable. Grade F, $14,000. Grade E, $15,000. Grade E1, $16,000. Grade D, $20,000. Grade C, $29,000. Ministers, $64,000. Deputy Prime Minister, $84,000. Prime Minister, $96,000. That is the sum total of it. You can compare with Annex III and you will know where they stand, inclusive of bonus, inclusive of everything. Copies of Annexes - BENCHMARKS, PRE & POST 1994 RANKINGS, AVERAGE 1987 & 1991 MONTHLY INCOME OF THE TOP THREE LOCAL EXECUTIVES IN A SELECTION OF COMPANIES AND PROFESSIONAL FIRMS (Cols. 1283 - 1290)

Some Members have said that we should not make these comparisons. It is demeaning. Let me ask, in that case, how do we decide? How much is enough? We have to defend them because this is a political issue. And at every General Election, every by-election, this is a subject which Mr Chiam has made many famous speeches. Mr Ling has made some, and so has Mr Low Thia Khiang. Today, they did not object. I do not believe they will forever hold their peace.

There must be a basis to decide what the job is worth. And our basis is: What is the job worth? What is the man worth? How much is it in the private sector, that is what you get, with some discount, in the public sector. It is how we settle Civil Service salaries, it is how we must settle Permanent Secretaries' salaries and, therefore, also Ministerial and the Prime Minister's salaries as well. The tables which I have given you show you the benchmarks which we use for all the different professions.

Annex I (Cols. 1283 - 1284) will show you what it is for all the professions. If you are a professional, for example, an accountant, then we will compare you to somebody in the private sector with professional degrees, an honours degree in general disciplines, because that is what you would have been if you had gone into the private sector. Depending on the quality of your performance, if you are a CEP `D', an officer with D potential, meaning you are likely to be able to reach Superscale D by the time you finish your career, we aim to match you to the 90th percentile of the private sector, that means, better than 90% of your cohort. If you are an Upper Timescale officer, that means, you serve but you are not outstanding, then we aim for your salary progression to be about the 50th percentile of the private sector. Similarly, with Executive Service, teachers, clerks, Technical Service, and so on. Annex I - BENCHMARKS (Cols. 1283 - 1284)

The only slight exception is the Administrative Officers because they are at the top of the Scheme. They come from a very broad range of backgrounds, not a particular discipline, and their responsibilities are general ones. Therefore, for the Administrative Officers, our comparison is with the top earners of each age group, year by year, as they go along. We are recruiting into the Administrative Service some of the best young men and women every year. There are 50,000 children coming out from schools a year, and out of these 50,000, we recruit about 12. They may not be the single most brilliant persons in that age group, but I think they will be among the top few of that generation. And they will compare themselves, as they go through their career, with how their peers of the same ability are doing in the private sector, not an average person, but somebody who was at school with him whom he knew. I knew him, he was like me in school, what job is he doing now.

Therefore, our benchmark aims for the top of each cohort. For those who are likely to go beyond Permanent Secretary, Grade C, our benchmark is that you will be the 10th in your age group. If you are 30 years old, you have not reached the Permanent Secretary's grade yet, but you are on the way, a promising young man in the private sector may be earning more than you, but you should be somewhere around there, no more than 10 people ahead of you. In fact, I believe we should also count lawyers, doctors, engineers and other partners, because that is a viable alternative for these bright and ambitious young people. But as of now, the comparison is with salaried private sector people. If you are expected to rise to Superscale D, which means senior Deputy Secretary, just under Permanent Secretary, already a good officer, then the private sector benchmark is the 100th person. It is not just us making these comparisons. I can tell you that every young officer makes this comparison and he does not need my table to know what his peers are earning. Because they are telling him, "Don't be such a fool, come and join me. Here are the terms."

I can also tell you that young people are anxious, eager to get ahead, prepared to work for it and are very sensitive to these differences, which are not just differences in rewards but also differences in their sense of having achieved a certain status in society. So that is what we aim for.

How does it work out? Look at Annex II (Cols. 1285 - 1286). Somebody who is on the D track, able to be Superscale D eventually, at the age of 30, he has reached the grade of PAS, Upper Timescale. He ranks 190th in his cohort. He may not be Bill Gates or Steve Jobs, but you tell me there are 190 people, of that age, abler and making a bigger contribution than him in Singapore? I doubt it. At 35, he has reached Grade F, his ranking will be 155. By the time he reaches 40, promoted to the grade of E1, his ranking is 178. In fact, he has lost ground, promoted but the private sector has moved faster. Age 45, he has reached the pinnacle of his career, Grade D. His ranking is 131. Our target was 100. After the revision, it shows that he will be around 90. You look at the right hand column. Annex II - PRE & POST 1994 RANKINGS (Cols. 1285 - 1286)

If he is on the C track, he does a little bit better than the D tracker, but still his ranking is beyond 100. And after the revision, he is around 50.

I think we have not gone far enough. Going far enough means revision not just to salary but also revision to the progression rate. Because it is not just how much you are paid but also how quick is your movement each year, promoted from grade to grade and higher responsibility which young people are looking for. We have speeded up civil service progression rate but I think we have not speeded them up enough and we should take some more steps to go further. And PSC will be discussing this with PSD and we will be taking it up.

That is along the way. When you reach the top grade as a Permanent Secretary or as a Minister of State or a Minister, your ranking is not just with your age group, but really with everybody in the workforce, regardless of age. Because if you are a Minister, you may be the only one of that age, but you are really competing with other people who may be younger or older than you, but doing the same job, carrying the same responsibility. So you must make the comparison regardless of age in the workforce. What do the figures show? At the bottom of Annex II, Minister of State, Permanent Secretary Grade C, before the revision he ranks 1,096. Ministers, 130, DPM, 59, PM, 38. After the revision, there is an improvement, but actually still not where we stood in 1989. These are comparisons which have to be made.

The other comparison you can make is Annex III (Cols. 1287 - 1288), which is what we showed you back in 1989. This is updated, and it shows you what top executives in the private sector are earning, generally, on salaries. Some of them like architects, doctors, lawyers, stockbrokers may be partners. These are not individual companies. But for each profession, we took three big firms. In each firm, we took three men - top man, the second man and the third man. We took their salaries, we averaged it for the three firms. So that is what you see in the table. On the right hand column, you see what the top man in that profession is earning. Annex III - AVERAGE 1987 & 1991 MONTHLY INCOME OF THE TOP THREE LOCAL EXECUTIVES IN A SELECTION OF COMPANIES AND PROFESSIONAL FIRMS (Cols. 1287 - 1288)

Architects are earning $250,000 a month; doctors, $168,000; bankers, $158,000, and so forth. As I pointed out just now, Ministers at $64,000 rank after local manufacturers, before car distributors. Oil company executives are understated because it so happens that several of the large oil companies had expatriate bosses. But, in fact, when they have Singaporean bosses, the Singaporeans will be paid as much as the expatriates. That is where Ministers stand.

The Permanent Secretary, Grade C, does not have to be compared to the top man on this table, because he has just entered the permanent secretary grade. But he is at least comparable to an average second man on this table. If you describe him as a chief operating officer of a big firm, I think that is an under description, because the Permanent Secretary would be looking after a Ministry. He may be looking after a statutory board. He may be responsible for a big company like Singapore Telecom, and any time equal to a second line job, in the middle. He is not even at the bottom of the third.

Permanent Secretaries today are second last, before car distributors (number three man). Permanent Secretaries, after revision, will have $29,000 and will move up some. He will rank 8th behind the number two man (oil company executives), and ahead of the car distributors, ahead of the engineers, and the multinational manufacturers.

My point is we have to set reasonable benchmarks and we have to aim to hit them and revise them. What is an objective basis for deciding their salaries? It is a certain level compared to the private sector, not the top, neither the bottom, but one which is somewhere in the middle with a certain discount, because this is a public service. It is not as volatile as the private sector. There is a certain amount of public service sacrifice which is expected, and I think fairly so. We hit that point and we maintain that point from year to year. I think we should establish these points clearly and explicitly so that each time we make a salary revision, we can refer back to these benchmarks and know whether we have made progress or not.

Mr Ling, Mr Chiam and Dr Soin have said you should not compare with the private sector. But we have to make the comparison. If not with the private sector, with what? Mr Chiam says this looks a lot. He does not begrudge it, but it looks a lot to a man from the grassroots. How much is enough, Mr Chiam? Should it be half? Should it be quarter? Should it be the same as a lawyer's pay which Mr Chiam earns? Or is that already too much? Because that may be 30 times what a worker earns.

Has either Mr Chiam or Mr Ling who has made a big issue of this, and said that since they are politicians, this pay is of no consequence and will be given away? I remember on one occasion that point came up before this House when Mr Chiam met Mr Rajaratnam and they had a challenge. Mr Chiam said, "I'll give up my allowance if you give up yours." Mr Rajaratnam said, "I'll give up my pay if you give up yours." There was no answer.

So what is fair? What is fair is what sort of job is it, what sort of men do you want. I think that a Permanent Secretary's job is any time higher, more complicated, more responsible, than all but maybe 10-15 CEO jobs in the private sector, at most. If you are running Defence, if you are running Education or Finance, not only millions of dollars but lives and the economy. You make a mistake, the consequences are disastrous. There may not be a financial bottom line which shows whether you have made a bad mistake or not. But we will still pay if you do.

The Minister's job is even bigger than that. It is not just running the organisation but also the political responsibilities, justifying, conceiving, explaining, persuading, carrying people along. It is a big job.

What sort of men do you want to hold this job? People are paid in Singapore from $500 to $3-$5 million. If you pay $1,000, I am sure there will be people who will queue up to be Ministers. If you pay $10,000, there will also be people who will queue up to be Ministers. Or $100,000. What sort of people do you want? I think you want people near the top. If you are in the legal profession and stagnating around the middle of the profession or the lower middle of the profession, conceivably, if you became a Minister, you would be a totally adequate Minister completely on top with your job and able to carry all that weight of responsibility. There might be some people like that, but I do not know how many. I know that we have searched and we have not found many. I think Mr Chiam has searched and he has found Mr Ling How Doong, Mr Cheo Chai Chen and Dr Chee Soon Juan. So when people say that there will be many people outside - if you do not want to come in, that is fine - there will be many outside who are prepared to do the job for less. That is good. Show me your team. Then Singaporeans will be amazed by the quality of your candidates. It is not possible. It is a real problem. We have to find the right sort of men to hold this job. And the right sort of men will be at the top of their careers. You will be a successful banker. You will be a successful lawyer. You will be a successful executive in an MNC. You may be a successful accountant. And you may still not be a successful Minister. But the chances are better and that is what we are aiming for.

It is necessary for us always to preserve a sense of public service, as even Mr Chiam and Mr Ling have pointed out. But you have to be realistic about what is necessary in order to make it possible for people to give public service. If this is unnecessary, then we would be able to see able people coming forward to say, "No, I not only do not want your pay, I will give you all the pay I have." As Mr Ling said, missionaries often do, and run the country as a religious order and a calling, and the country will prosper. I think we can find one or two such people. Can we find 81 to be MPs? I have not seen any in the Opposition who says, "I'll forsake my privileges or rights." So that is a real problem. We pay for what we get, what we want. Whether the incumbents are up to that, that is a separate question which Singaporeans must decide. But that is what we are aiming for. We try to get Ministers who will meet that level. Singaporeans have to judge whether we have been successful.

I think the right solution is, if you say that the Minister is not up to it, you change the Minister. I do not think the right solution is to say, "This is a cheap Minister. We will give him half pay." You might apply that on both sides of the floor and where would that leave us? None of the Opposition Members have spoken up vigorously today. Neither Mr Ling nor Mr Chiam nor Mr Low. I hope they remember this silence when next they hold an election rally. [Applause].

Mr Low Thia Khiang: Mr Speaker, Sir, the Deputy Prime Minister has not answered my question on the performance bonus which I brought up just now.

BG Lee Hsien Loong: Sorry. I should have done this earlier. The Prime Minister and a few of the appointment holders are on a fixed bonus - the President, the Chief Justice, the Speaker, Chairman, PSC, the Auditor-General, and the Attorney-General. The rationale is simple. If the Prime Minister is to be paid a variable bonus, who is to decide how much he deserves? Or the Speaker. It cannot be done. He is the boss. He will decide what other people are worth. He will judge, he will consult a few of his senior colleagues, but finally he takes the responsibility and decides how much each person's contribution is worth. For the Prime Minister himself, a number has to be set. It used to be set at two when the performance bonus range was zero to two. In fact, the Prime Minister never took two. He took less than that. When we revised the scheme to zero to six, the Prime Minister suggested that he would set his bonus at four. It is a fixed point. I think even with that fixed point, if you make a comparison of the Prime Minister's salary with Annex III, you will see that there is a long gap between him and many of the private sector business people.

The Prime Minister (Mr Goh Chok Tong): Mr Speaker, Sir, I have left the Deputy Prime Minister, BG Lee, to carry the burden of explaining the reasons for the salary revision because he has been working on this in the last few months. From the response of the Members of Parliament, I see that there is unanimous support for the revision for civil servants. I believe I am right in my assessment. It is the adjustment for the Ministers that attracts some concern. I want to confine myself therefore to the philosophy behind the salary adjustment for Ministers and other political office-holders.

Some of my colleagues are a little squeamish about the political cost of increasing salaries for Ministers. They fear that the Opposition will exploit it and work up voter dissatisfaction against the Government.

I do not deny that this salary revision will cost us some votes because the Opposition will play up the politics of envy. And indeed they have, at every election, by mischievously and wrongly comparing how much a Minister earns with what an average worker earns a month. Today, Mr Ling has said that he does not begrudge the pay of the Ministers. Mr Chiam and Mr Low seem to be supportive. Of course, they made some valid points about Ministers coming in to serve not just for money alone. I hope they will remember what they have said today and at future elections do not play up this politics of envy just for the votes. There is some political cost. But I have to weigh this against the greater cost to the country and Singaporeans if we fail to have a Cabinet of integrity and exceptional ability. I have weighed the costs to the PAP, and decided that whatever they are, the larger interests of the nation must prevail.

I have faith in the commonsense and judgment of the majority of Singaporeans. So long as we can deliver a better life for them, and clearly explain the rationale for the salary revision, I believe they will support our fundamental premise that a Minister must be paid a salary close to what his private sector counterpart holding equivalent responsibility is earning. But we must clearly show the nexus between their own future and having honest and competent people in Government.

No group of Singaporeans is as crucial to Singapore's continued peace and prosperity as the team that makes up the Cabinet. It is this team which manages Singapore and determines the quality of your life. We need 17 members to make up this team - Prime Minister, Deputy Prime Minister, Senior Minister and Ministers. I have only 14. Mr Dhanabalan will be leaving at the end of this year. Dr Yeo Ning Hong has served me notice to leave in six months' time. That will reduce my team to 12.

We must have the best people for Cabinet. Their policies and actions will determine whether Singaporeans continue to enjoy better jobs, better housing and better quality of life, or whether the country goes downhill and renders Singaporeans jobless and poor. We are looking for people who, if they are not in politics, would eventually be Permanent Secretaries, Chairmen or Chief Executive Officers of large companies. The Minister's job is more onerous and will have greater impact on Singaporeans' livelihood and life-style than even the CEO of the largest company in Singapore. He should not earn much less than CEOs of top companies. If a CEO and his management team make bad business decisions, and cause the company to go bankrupt, only the shareholders, employees and creditors will suffer. But if the economy is booming, their suffering will be short-lived. The employees, for example, can get alternative employment easily. But if the Prime Minister and his Cabinet mismanage the country, and bankrupt the economy, it is not easy for Singaporeans to seek alternative employment, or to migrate. Their suffering will be long and intolerable.

I once asked Dr Tony Tan what was the difference between his present job as Chairman of OCBC and his former appointment as Minister for Education. He put it succinctly. In OCBC, he makes more decisions everyday than when he was in the Ministry of Education. But each decision is a relatively small one, affecting only a small number of people. In the Ministry, most decisions are big ones, affecting a large number of people and for life.

Study why some countries do well and others do not. You will see that the major explanation for the difference in performance is the quality of Government - its competence, integrity and dedication to the people. It is invidious for me to make this point by citing examples. But you can cast your mind near and far and draw your own conclusions.

Singaporeans have seen their standard of living rise year after year since 1959. That is not a random outcome, a fluke. It is because of honest and effective leadership. If I am unable to recruit honest and able men and women into Cabinet, I cannot maintain the same high degree of honesty and competence. The standard of Government will go down, and with it, the standard of living of Singaporeans.

The proficiency of Government is increasingly recognised as a major factor determining a country's economic health. BERI (Business Environment Risk Intelligence) studied 47 countries and ranked Singapore second, just after Switzerland. Is it any wonder why Switzerland, despite its lack of natural resources and having a small and multi-lingual and multi-religious population, enjoy one of the highest standards of living in the world?

My biggest responsibility is to ensure that Singapore continues to have a proficient Government. It is not an easy responsibility to discharge. Despite our publicly-announced policy to pay market wages for Ministers, comparable to what top civil servants and executives earn, few people want to take on the job. Instead of getting more people to join the Cabinet, I am suffering a loss. Dhanabalan and Yeo Ning Hong are not leaving for reasons of pay. They have never complained about their salaries and are not seeking better-paid jobs in the private sector. But their vacancies will be more difficult to fill if we require potential Ministers to take a substantial pay-cut from their present jobs.

I have approached several people with ministerial potential to stand for election as MPs. They have declined. They did not want to change their life-style and lose their privacy. This loss of privacy is not factored into the salary. I do not think you can put a value to it. If a person values his privacy, you can pay him much more, but I do not think he would come in. It will become even more difficult to persuade able Singaporeans to shoulder the burden of state and become public figures if Ministers' salaries are lower than what they can earn in the private sector.

I have heard comments that Ministers should be paid basic wages, or modest wages, as service in such high offices should be driven by the desire to work for the country and not for pecuniary interest. I find this argument idealistic and lacking touch with reality. Ours is a situation where potential Ministers have to be persuaded to join us. Yes, altruism is important and a person must not join the Government just because the pay is attractive. There must be that extra in him. But even if a person is driven by idealism, there still has to be basic parities to attract him or her into politics and high office.

Precisely because we have peace and prosperity, and enjoyed robust economic growth, the opportunity cost of taking up public office has gone up. It is not just a loss of personal privacy in public office. Vast opportunities await the able and talented in the private sector, and not just in Singapore. Opportunities abound in the region.

China alone offers tremendous opportunities for the enterprising, especially if they are also proficient in the Chinese language. There is also Vietnam. India will also offer vast opportunities. Not all who venture into China or into Vietnam, or later into India, will make it rich. But many will. Already, many have given up settled jobs for the excitement and rewards of venturing overseas. Take, for example, Ong Chit Chung. He was an academic. He resigned as Parliamentary Secretary to head a company which has interest in expanding its activities outside Singapore. Ow Chin Hock too has just resigned from the University after serving nearly 22 years. As the PRC Chinese would say, he has "plunged into the ocean" (xia hai ). Another example is Tan Cheng Bock. Besides being a general practitioner and an MP, he is also Chairman of a company with interests in investment and manufacturing outside Singapore. I hope Tan Cheng Bock will not mind if I reveal that he earns more than a Minister. And I know many successful lawyers in the 50s, people whom I know personally, who earn much more than a Minister or the Prime Minister.

The robust regional developments are making my job of assembling a good team in Cabinet very difficult. It is much more difficult as compared with Senior Minister's when he was Prime Minister.

Firstly, in the 1950s, the political leaders were seized with the passion for independence then prevailing in the region. Having secured independence, they had to build a nation. They had a clear historic mission. They did not have to be persuaded to come forward.

Secondly, in the 1950s and 1960s, and even the 1970s, the best jobs were in the public sector. It offered good pay and job security. In the 1990s, the private sector has overtaken the public sector. It now offers more challenges and much more attractive opportunities for able men, particularly with the economic boom in the region.

Thirdly, in the 1950s and 1960s, Senior Minister's catchment of political talent extended beyond Singapore to Malaya. Mine is restricted to Singapore.

It is not possible to pay a Minister as much as he can command in the private sector. But the pay must be such that a younger generation of Singaporeans will consider it worthwhile to join the Government in lieu of the comforts and privacy of their present jobs and lifestyle. If we do not pay Ministers adequately, we will get inadequate Ministers. If you pay peanuts, you will get monkeys for your Ministers. The people will suffer, not the monkeys.

I have been in the Government long enough to know that if the Cabinet is inadequate, and worse, dishonest, disaster for the country must follow. Do not compromise your own future by playing up the politics of envy. Help me get the best team to look after your and the country's interests. [Applause].

Mr Wong Kan Seng: Mr Speaker, Sir, I beg leave to withdraw the motion.

Motion, by leave, withdrawn.