COMPETITIVE SALARIES FOR COMPETENT AND HONEST GOVERNMENT

Debate resumed.

Mr Goh Chok Tong: The benchmarks will be updated annually, and public sector salaries will be correspondingly revised. The Government will also review the salaries of all the other services, for which benchmarks have already been established. Salaries will be adjusted service by service, as and when they get out of line. Infrequent but large service wide salary revisions, in which all services automatically get a raise, will be a thing of the past.

At present, both Ministers' and civil servants' salaries are considerably below the benchmarks. Staff Grade I Ministers earn less than half (48% to be exact) the average of top private sector professionals, compared to the target of two-thirds. Superscale G officers earn 80% of their benchmark figure. We will revise salaries for civil servants, not overnight but progressively, to reach the benchmarks over three years. For Ministers, the adjustment will be even more gradual.

Bear in mind that even after the revision is complete, at two-thirds the private sector, there will still be about 100 people in the private sector earning more than a Staff Grade I Minister. These 100 are income-earners. They do not include entrepreneurs, owners of businesses, stockbrokers. If we include them, far more than 100 Singaporeans earn more than a Staff Grade I Minister.

Ministers vary in their ability, and in their private sector earning power. But I have no doubt that more than half of my Cabinet would have been among the top 100 salary earners, had they opted for a private sector career.

I cannot truthfully say that all Ministers will get what they are being paid if they were in the private sector. But in politics, I need a balanced team, to reflect the political realities in Singapore. Though a Minister may not earn the same amount in the private sector, I must be satisfied that his responsibilities and performance as a Minister, in particular, his political contribution, justify his being made a Minister. So we do not appoint young MPs as Ministers rightaway. They have to prove themselves first. A few, when they were appointed as Minister of State or Parliamentary Secretary, did take a pay cut, like Dr Ker Sin Tze and Ho Peng Kee. There was real financial sacrifice.

I need a team to run the country. $600,000 a year for a Minister will seem a lot to most Singaporeans. Even $300,000 will seem a lot to them. But see it from a bird's eye view, and not a worm's eye view. See it in perspective. The total cost this year for all the political office-holders, from Political Secretaries to Prime Minister, is $17 million a year. Weigh this against the GDP of $89,000 million. That is what we are responsible for.

I am asking today for your endorsement of a formula to pay civil servants and Ministers. Judge the correctness of the formula by results, not by comparing what you are earning with the salaries of the Ministers and senior civil servants. You should ask yourself whether the Cabinet as a team is worth the $17 million today. Like durians, the proof is in the eating. You should get what you pay for.

My task is to achieve and sustain the highest standard of Government in terms of incorruptibility, integrity, and competence so that you will enjoy the highest standard of living possible. My Government must produce jobs, pay increases, homes, schools, social harmony, economic growth, the lot which gives you a better life. If we succeed, as we have done in the last five years, $22 million a year for my team under the new formula to be implemented over several years, is small beer.

Measure the $22 million against the cost to you of having an incompetent and corrupt Government. Wrong policies and corruption could easily reduce Singapore's economic growth by a couple of percentage points - 2-3%.

Our GDP is $89 billion. A 1% growth is worth $890 million. A 3% reduction in growth as a result of mismanagement and corruption will cost Singapore $2,670 million. This is not a paper loss to the economy. It is an actual loss coming out of your wages and profits. It will be penny wise and pound foolish, if you deny me the means to get the best people into Government.

This will not be the last occasion that the Government explains and justifies its policy for paying Ministers and top civil servants. But the White Paper will carry the debate forward, and save us from covering the same ground over and over again. The policy proposed in the White Paper is essential to maintain the quality of the Government over the next 15 to 20 years, when high growth in the region will make it more difficult than ever for us to recruit outstanding men and women to become civil servants and Ministers. We need to change the perception of an Administrative Service career among Singaporeans, and especially among ambitious young people who are leaving school, and choosing scholarships and professions. We also need more Singaporeans to come forward to serve as Ministers, to lead Singapore and maintain the prosperity and security we now take for granted. The White Paper, I hope, can help us to do that.

I therefore ask this House to endorse the White Paper on "Competitive Salaries for Competent and Honest Government" as the basis for setting salaries of Ministers and senior public officers.

Question proposed. 4.03 pm

Dr Ow Chin Hock (Leng Kee): ( In Mandarin): Mr Speaker, Sir, I support the Prime Minister's motion. First, let me deal with the principles set out in the White Paper. I endorse these principles.

The first principle is "transparency of salaries". We should give Ministers and top civil servants clean and realistic salaries, and not like many other countries where the salaries of ministers and civil servants are deliberately kept down, but there are all kinds of perks and allowances to enhance their incomes.

The second principle is "high salaries to attract talents". I support the principle that the pay of Ministers and top civil servants should be linked to the private sector and relativity with it should be maintained. The reasons are very simple: in an age of high growth, high reward and high expectations, the public sector must adjust its salaries so as to be competitive with the private sector for the limited talents, as the Prime Minister mentioned just now. Regionalisation has also made this competition keener. The public sector should have a certain proportion of talents in order to maintain the policy of Government by the talented ( ). Of course, salary is not the only way to attract talents.

The third principle is "benchmarking of salaries". I also endorse that benchmarks must be set for the salaries of Ministers and top civil servants in accordance with the fluctuations and adjustments in the private sector automatically. This is to avoid the controversy or even political issue that arises every time the salaries of Ministers and top civil servants are adjusted. We must, and we have the right to, create our own model.

We must remind ourselves that we are not talking about the salaries of a few Ministers and top civil servants. Our focus should be on how "to attract the right talents and to maintain the integrity of the Government with high and proper salaries" ( ). This is to ensure that we maintain a clean, upright and able Government, which is our precious asset. While many countries are practising money politics and suffering from malpractices and corruption, we should value and treasure this asset even more. This asset is one of the prerequisites for Singapore's survival.

I understand the problems faced by the Prime Minister in attracting talents. I also know the feelings of the Prime Minister on this issue. But as the Chairman of the Feedback Unit, I must also sincerely tell him the feedback from the ground. The ground feedback is not very favourable. On 26th October, the Feedback Unit held a dialogue with 37 community leaders, union leaders and professionals on the White Paper. On 28th October, I wrote to the Prime Minister to brief him on the main points raised in the dialogue. All participants in this dialogue agreed that the Ministers should be well paid and many even suggested that after the Ministers have retired after successfully discharging their duties, they should be given better retirement benefits in addition to the pensions.

But except for two, all the other participants were against or expressed their doubts about the two criteria of the benchmarking and the methodology of formulating the benchmark: why select only six professions? Why select only the top four of each profession as the benchmark of the starting salary of the Minister? Why select the 32-year old and the 15th position of the private sector's pay as the senior civil servant's benchmark?

The participants also expressed two views: first, the benchmark was based on incomes of the top four earners in 1992, but because of profits and losses, these top four earners may not be able to maintain their positions as the top four in future. That is to say, after some years, they could be replaced by others. But the Ministers' salaries are pegged to any top four earners in each of the six selected professions, or the average earnings of the 24 top earners. This kind of calculation is upward biased, as it reduces the possibility of downward adjustment and the magnitude of decline of the Ministers' pay. The other view expressed by the participants was that if the pay of Ministers and top civil servants is to be pegged to the private sector, then to some extent they should also be tested by market forces. The salaries should reflect the job size and their performance.

Although the White Paper has spent a lot of space in explaining the need and the criteria of the benchmarking, I feel that the White Paper is not very convincing, and in many places, the arguments are even subjective or even arbitrary. For example, if the local top executives, because of the nature of their work, are more comparable with that of the Ministers, then regardless of whether they are in local manufacturing, MNCs, oil companies or other companies, they should all be included for benchmarking. Another example is that architects, doctors, accountants, engineers and lawyers have all the time been regarded as professionals, but architects and doctors are excluded from the professions selected for benchmarking. The White Paper has pointed out that "a good architect does not necessarily make a good Minister, and vice versa". I agree with this view. However, this statement is equally applicable to bankers, accountants, engineers and lawyers. Outstanding Ministers for Finance, like Dr Goh Keng Swee, Mr Hon Sui Sen and Dr Richard Hu, were not bankers, and Dr Hu came from an oil company. The position of Minister for National Development need not be taken up by an architect, and similarly, the Minister for Health need not be a doctor. For benchmarking, the selection of jobs should be jobs which are more comparable or similar to the jobs of Ministers, which require general management skills, and not specific technical expertise or other special skills. In other words, the CEOs, the general managers, and top executives in the private sector should be more appropriate than professionals for benchmarking.

I also feel that if only six professions and only four earners from each of the professions are selected for benchmarking, then the database will be too narrow, and this may also make the average salaries unstable and unreliable. Perhaps we should consider using more general occupations (occupations of general talents and not of expertise) and percentile for the benchmarking. Another proposal is to select all the local CEOs and top executives' pay and use their average income as benchmarking for the salary of Ministers. This way of calculation may be more acceptable to the people, and the database will be broader for comparison. Similarly, if we are concerned that the widening of income gap between professionals in the private sector and civil servants in the public sector will affect the career choice of school-leavers and reduce the number joining the public sector, then we should select even more professionals, including architects and doctors, as the basis for benchmarking top civil servants' pay in order to broaden the database. Moreover, these occupations and jobs for benchmarking civil servants' pay need not necessarily be similar to those selected for benchmarking the Ministers' pay. However, whatever the method of calculation, whether there is discount or not, we still have to position the pay of the top civil servants and the Ministers. The final question is whether the levels of the salaries will be acceptable to the people.

Mr Speaker, Sir, the controversy is not so much on civil servants' pay but more on Ministers' pay. Each time, when adjustment of pay for Ministers is made, there will always be controversy. I ask myself why Ministerial salary should cause such controversy. I believe that there are three main reasons. The first reason is that some people feel that the Ministers' work and the work of the executives and professionals in the private sector are not the same in nature. They are not even comparable. Ministers have power and social status. The Ministers' collective or individual performance is not like those in the private sector who are assessed by profit and the bottom line. More importantly, Ministerial posts are public service. Ministers are expected to have altruism and commitment. Many social workers, community leaders, town councillors and union leaders also sacrifice their time, their privacy and they serve the society and the people without a single cent. So they ask: what is the price for the spirit of commitment? They also ask: are we giving the wrong signal to accentuate the trends towards materialism? Many participants in the dialogue also felt that those who go into politics should have noble ideals and a high degree of commitment. Although 26 of the participants agreed that the pay of top civil servants and Ministers should be pegged to the private sector, only 11 agreed that this linkage should be made for the Ministers. Maybe some feel that these participants are too idealistic and even outmoded in their thinking and that they belong to the age of the dinosaurs. However, I feel that it is fortunate for our society that we have such people around. Like the late Dr Ee Peng Liang, we know that he never mentioned about his pay. He worked for the society. If we all think of our market value and our opportunity costs, what kind of society will we become?

Another reason for the controversy is that some people, including most of the participants in the dialogue, agreed that Ministers should enjoy high pay because they carry very heavy responsibilities and times have changed. Times are different, as the Prime Minister also mentioned. It is only with high pay that we can attract talents to the governing team. However, they feel that some Ministers do not deserve such high pay. In other words, they separate "Ministerial posts" from "individuals". Singapore is a very small place. Every person knows what sort of pay certain Ministers are drawing before they joined politics. If their pay before they entered politics was lower than their current Ministers' pay, then it is very difficult to convince people that they are making any financial sacrifices after entering politics. Further, after the Ministers leave the entire administrative machinery, will they be able to earn as much outside?

The third reason for the controversy is that inevitably, some would want to compare their own pay with the Ministers' pay. In addition, there are those with ulterior motives who would try to stir the ground and make this a sensitive and emotional issue. This year, many people are unhappy: housewives and retirees who have neither paid any tax before have to make adjustments for GST; civil servants are still grumbling about the changes in medical benefits, and those who aspire to own cars are complaining about high increases in COE prices. We cannot afford to ignore the feelings from the ground.

Objectively, in every economic system, salaries and wages are determined by demand and supply. If we are left with only one garbage collector, then his pay will certainly be higher than that of a lawyer. In China, some intellectuals lament that scientists who are able to make guided missiles ( ) do not get as much as the hawkers who sell "tea-leaf" eggs ( ). In every economic system, the structure of salaries and wages reflects the relative scarcity of jobs. On this basis, we aim to achieve "from each his best, to each his worth" ( ). We must explain to the people this principle so that they have a sense of proportion in dealing with this issue. We must spend much time and effort to explain patiently the intention of the White Paper, and to convince them of the need to attract the right talent with high pay to run this country, and of the importance of maintaining a clean, upright and able government. We are in an age of rapid changes. If the Singapore economy is not properly planned and managed, then COE prices will no longer be a problem, instead, we will face more serious problems such as lowering of real income for the workers, the investors do not come in, widespread unemployment, and even problems which threaten the very survival of our country.

Let me summarise, Mr Speaker, Sir. On the whole, I support the basic principles of the White Paper. But from the feedback collected, I feel that we should not be rash in setting benchmarks for Ministers' and top civil servants' pay. This is a very important issue with far-reaching effects. We should consider sending the White Paper to a Select Committee to collect more views and then make the necessary adjustments to the proposals in the White Paper. We should also allow the public time to digest the principles of the White Paper and accept the extra amount for Ministerial salaries as reasonable.

Finally, let me make one observation. In 1991, apart from Mr Ong Teng Cheong who became the Elected President, four resigned their Ministerial posts. I do not know and need not know why they left, but we can be sure that these Ministers have left not because of money. This gives us a lesson: high pay may reduce the difficulties of attracting talent into politics, but will not necessarily retain talents. Apart from salary, intangible factors such as challenges of the job, sense of participation in policy making, and the camaraderie among colleagues will also affect a person's decision to stay or leave. Talents are hard to seek, they are even harder to keep.

The Prime Minister seems to like the term xia hai, ( ) "going down to the ocean". On 3rd December last year, he mentioned that I resigned from a 22-year old University post to go into "the sea of commerce". Fortunately, I am not a female. I have already explained to the Prime Minister that in China, xia hai means you resign from public office to go into commerce. But for me, I am still spending at least half my working time in the constituency, in the Feedback Unit, in the Town Council and in other public duties. I left the university not because of money. If I had continued to stay in NUS and drawing the pay of Associate Professor and with the pay of my wife in a polytechnic plus our savings, we have enough to pay for our family expenditure and the overseas education of my two children. We lead a simple life, and our demands on material things are not very high. I left the university for reasons other than money. The main reason is that I will have the opportunity to lead my company to develop in China and other places. I get the returns on investments for my company. At the same time, I hope through the enterprise, I will be able to achieve my task, carry out my wish, accomplish my mission, and also fulfil my promises to a friend (a former Minister of State) who entrusted me with a duty before he died. This kind of aspiration and sentiment cannot be understood by those who gauge people by dollars and cents ( ).

Mr Ling How Doong: Mr Speaker, Sir, Singapore is about to score another first. This time round, it is to peg the Ministers' salaries to that of the private sector. In fact, we should not be discussing the formula or benchmark upon which Ministers' salaries should be calculated, for the simple reason that the philosophy behind the increase is wrong in the first place.

Here are the reasons why. First, while no one disagrees that Ministers should be paid well for the job they perform, most of us are disturbed as to the meaning of the word "well". How well? Before the salary increase, Ministers have been drawing salaries of $35,000 and upwards. Even by Singapore standards, this amount not only affords a family to live comfortably but also luxuriously. The pay increase will only mean that the Ministers want to live more luxuriously. The increase in pay will also mean that half of Singapore's working population would have to work for five years to make the same amount of money that a Minister would make in one month.

The Government's argument is that Ministers should be paid salaries that are competitive with what top executives are making in the open market. This is the most warped argument, if ever there was one. Top corporate executives and CEOs compete with each other for their salaries, because there is competition amongst them. They are not political leaders, but administrative and managerial leaders. For example, a CEO of Citibank may compete with the CEO of Keppel Bank. They offer similar expertise and work experience.

Who do our Ministers compete with? Comparing the type of expertise is entirely a different matter. The job of Ministers is mostly as an overseer - to oversee a Ministry. They are backed up by the whole Government machinery. They have the Administrative Service to back them up in respect of running the administration and management. Even before they embark on a project, they can call upon international help and get experts from overseas. All these are within their resources. But if you compare a Minister with a CEO of a profit-oriented corporation, the CEO is engaged to increase the profit of the company. CEOs have limited resources. They have to depend solely on themselves, unlike Ministers who are backed by all the various Government departments to run the Ministry.

On top of that, Ministers have all the powers, the prestige, travel, which a CEO does not have. Curiously enough, there are people in this world who have the idealism that they want power but they do not want so much remuneration. It is as simple as that. So you cannot have both. You cannot have power as well as remuneration to such an extent. Here I am not talking of a Minister who is underpaid. Bear with me. I am not talking of Ministers here who are underpaid. You cannot draw a comparison with the private sector for this reason.

Ministers, after their term, would have an opportunity to get a job outside quite easily, simply because of their experience and the stature of being a Minister before. So they are in a win-and-win situation here, not the CEO anyway.

A more suitable comparison would be the salaries of Ministers in ASEAN countries, and of course tied with the cost of living there and with certain knots up. I would imagine that would be the best comparison. You cannot compare political leaders with that of a corporate executive. As regards the salaries of Singapore Ministers, even when compared to politicians of a more advanced country, the intention to increase their salaries becomes quite incomprehensible. Even before the increment, our Ministers are considered the highest paid in the world. With the increase, our Prime Minister's income is four times that of the President of the United States and about five times that of John Major, the Prime Minister of England. Of course, it reminds me of the incident cited by our Prime Minister about MPs in UK. They were canvassing for all these things, not forgetting that the income of the Prime Minister of UK is only about $18,000 a month, and the MPs about $8,000 a month. It is unlike Singapore. If the Prime Minister of UK is paid $65,000 or $96,000, I do not think this thing will ever happen. So if you want to draw a comparison, you draw it that way. Similarly, for judges in the United Kingdom or the United States. If the President is being paid about $26,000 a month, I doubt very much the Federal judges will be paid more than $26,000 a month. There is no reason why they bemoan the fact that they are underpaid.

What I am saying is that - I repeat - no one begrudges the fact that Ministers should be well paid. But the question is: how well, and how much? Is that the yardstick to measure? It is wrong to compare with the private sector. I think our Prime Minister will recall, not very long ago, he accused the SDP of playing the politics of envy. By comparing the Ministers' salaries with what the private sector is earning, I think our Prime Minister is also playing the politics of envy now. He talks about the private sector earning so much money. Is that not also politics of envy?

I can even go one step further to say that, besides playing the politics of envy, this is a very dangerous trend for the PAP to adopt in the sense that now they are encouraging the politics of greed. You start off with $96,000 and you want to ask for more. You start with the benchmark of the four highest earners, later on, three, two and one. It keeps on going up. Ultimately, you decide that you should be the highest paid in the land. The problem here is this. For the civil servants, the Government decides their benchmark. Who decides the benchmark for the Ministers? They decide themselves. Therefore, it is essential that they must come back to Parliament every year, not just to peg it to that of the private sector but to decide how much they should be paid.

Even if we were to pay our Ministers the salary that they would get if they were not in politics, a survey would show that most of the Ministers were not getting the salary set by the benchmark. Most of them were not even getting $20,000 per month before they entered politics. How do you square out in that fashion? I can understand that if a Minister, before entering politics, was getting $30,000, but on entering politics he was getting $20,000, there is a sacrifice of $10,000. But as I stated earlier, most of the Ministers, before entering politics, were not even drawing between $15,000 and $20,000. After entering politics, they are now getting $65,000. Where is the sacrifice? It is a very peculiar situation here. In fact, with the pay increase, Ministers' pay is increased four to five times.

An hon. Member: How do you get four to five times?

Mr Ling How Doong: For example, before the last increment, the Prime Minister's salary was $30,000-odd, of course, with bonuses thrown in. Bonuses were variable. They were not sure whether they would get it or not. But now the Prime Minister is definitely sure of getting the bonus. It is not variable any more. It is fixed. So he is getting $96,000. Does the increase not come to 3 - 5 times?

The Government bemoans the fact that the low salary of the Ministers would not be able to attract people to the rank of Ministers. But I think all of you are aware of the fact that the attraction to politics is not merely salary alone. Similarly, you have Ministers and Administrative Officers who have left the service. I am quite sure they left the service not because of salary alone. There are other factors for them to decide to leave the service. I am quite sure that salary is not the only factor that decides why people leave.

Look at the title of the White Paper - Competitive Salaries for Competent and Honest Government. To me, it would suggest that only good salary would attract competent and honest Ministers. Look at countries around us - the United States, Japan - all their leaders were paid below $30,000 a month. Then you have the Prime Ministers of the United Kingdom, Australia and New Zealand - they were all paid below $20,000 a month. Yet at every election they attracted talented people to stand for election. Why? I do not think money is the only reason. Why do you have all the people coming back in spite of the low salary? In fact, the person most admired by Singapore was the former Prime Minister, Mrs Margaret Thatcher. Why did she enter politics despite the fact that she was being paid about $18,000 a month? So it is quite obvious that it is not the money alone.

One important factor is this. Everyone of you here, when you entered politics, you entered with your eyes open. You know what you would get by way of salary. You cannot now be heard to say, "Oh, I am not paid enough. I want to increase my salary." Imagine for a moment, if every employee in Singapore, after signing a contract, knowing the nature of his work, knowing how much he would be paid, he says, "Sorry, I am not paid enough. Please increase my salary." Can he be allowed to do that? He cannot, because he is an employee. But here we are faced with Ministers who are employers themselves. They decide for themselves. It is as simple as that.

The other proposition would be this. If you think that you can make more money in the private sector, is there anything to prevent you from resigning and going over the other side and make more money? There is nothing to prevent anyone of you here from doing so. Why are you now coming to Parliament to tell us, "Oh, I am underpaid", and all these things, despite the fact that you get so much pay. Resign and go over the other side! Similarly, as has been said earlier, some of the Administrative Officers left the service because they feel they can get more money in the private sector. The Ministers can always follow suit.

The problem is that while the Ministers are getting their pay increase, the people get a pay decrease in the sense that everything has gone up. Radio licence fee has gone up, COE price has gone up, GST, and so on. Indirectly, their take-home pay is lower. On the one hand, you increase your salary but, on the other hand, the lower income group is getting less money. It is a myth that the present leadership is indispensable, and that no better leaders can be had. It is also sad that most of our leaders say that when they first joined politics they had an ideal, they had a conviction, they had a sense of mission and sacrifice. In mid-stream, they made a turn-about. Let us not desecrate this time-hallowed tradition of mission, of service and sacrifice to the nation. Remember what the late President Kennedy said: Ask not what your country can do for you, ask what you can do for your country. 4.42 pm

Mr Bernard Chen (Brickworks GRC): Sir, before I start, I want to dissociate myself from the comments of the previous Member. Obviously, he does not know what a CEO's job is and I do not think he knows what the Minister does either. I think I have the fortune of being in all three places. I can tell him that what the Prime Minister said about getting the best people is the first priority.

Mr Speaker, Sir, the business of Government, I think we all know, is getting very complex. With rapid economic and social development over the last two decades, we have covered all the easy things. We have done everything that we could do easily. Since about five years ago, we are encountering more and more difficulties, whether it is traffic control, COEs, rising health cost, or creating a second wing to get export markets and overseas investment opportunities. Just as in private corporations which need the best to manage them in times of difficulties, Singapore needs to be manned by the best Ministers and the civil servants we can get. There is no quarrel that there is a sound argument for Government's proposal to try to match the pay in the public sector to the comparable counterparts in the private sector because they are drawing from the same pool. We cannot fault the argument that running Singapore is any different from managing a large business enterprise. We need the best in both.

There is, however, one substantial difference that needs to be taken into account. In the private sector, accountability is direct. The Chief Executive's performance is measured directly by the level of profits he can achieve. Should profits decline or, worse, should losses be incurred, he can get the sack. He shoulders total responsibility for the corporation. Sometimes, tolerant directors may give him some time to redeem himself. More often than not, he may get the marching orders and has to look for another job. Unlike the public sector, there are very much less opportunities for transfer within the corporation. There is no safe haven for those who do not perform to be transferred to places where they cannot do any harm.

Secondly, the Chief Executive's remuneration package is often tied to the profitability of the corporation. In good times, he gets more. In bad times, he gets paid considerably less. This happens even when the corporation's decline in profits has nothing to do with him but takes place because of external factors completely outside his control. World recession is no excuse in having lower turnovers. Similarly, losses in investments in countries with wars are not to be blamed for business failures. The Chief Executive's remuneration, therefore, can fluctuate substantially as there are not that many corporations which can sustain their profitability over a long stretch of time. One can probably say that the top three earners in one year will not be the same in the following year. This is an important consideration. If we were to peg the civil service to the best in the private sector in any given year, we are in fact assuming that there are no downsides, which is not the real situation in the private sector as incomes of individuals fluctuate according to their fortunes.

The question before us therefore is if senior civil servants and Ministers are to be paid the same remuneration as the best in the private sector, should they also not be subjected to the same accountability? While we can accept that yardsticks for measuring performance in the public sector may not be as specific as those in the private sector, I believe that we should at least try to have an evaluation system that approximates the private sector practice as far as possible. As an example, when the salaries of certain grades are revised on a service wide basis, all officers in that grade enjoy the revision. In other words, individual performance is not taken into account. It is only during promotion exercises that the officer's performance becomes relevant. We should have a performance evaluation system that can take into account his performance for the year. If the officer's performance is outstanding, he should get more than average increase. Conversely, if he performs badly, he should take a pay cut. If he really makes a mess of it, he should be fired. This may sound extreme. But if we were to equate apples with apples, we should also match conditions in the public sector to those in the private sector.

In the private sector, individual performance is set according to targets laid down by the board and this is the basis for assessing pay increases. This direct accountability puts considerable stress on those occupying senior positions. I can assure the House that this stress can be very substantial. Members will know that I sell cars in my part-time job. My managers have begun to call me COE, instead of CEO, especially on the 15th of each month when the COE prices are about to come up. This stress makes the officer's career a very dangerous one. The fear of not achieving budgeted targets and, worse, losing his job more often than not spurs him to work harder and smarter and that is what he is paid for.

The public sector is more protected in this regard and I think the rice bowl is probably more metallic. Firing someone in the private sector is much easier than the public sector. Committees of inquiry have to be convened and they have to establish the cause for dismissal which may take months and, eventually, the cases may fizzle out.

I would think that if we were to accord the same remuneration to the senior civil servants and Ministers, we will have to equalise the treatment in all respects. This should include a performance evaluation system that will reward the best performers. I am glad that the Prime Minister has commented that the civil service is now undergoing some changes and that Personnel Boards are being convened to look after the respective services. A very important part of the job of these Boards would be to assess who are the good performers and who are not the performers and make the promotion and revision of salary decisions accordingly.

We have to ensure that the ablest people are put to run the Government and the civil service which means that those who do not measure up should be removed. In a speech to the civil servants at the Victoria Theatre on 26th October 1965, the then Prime Minister, Mr Lee, stressed the need to improve the efficiency of the civil service. He made the point that only the good performers should be rewarded with promotions. Automatic promotions were out and officers who thought they could get to the top without working for it, as he put it, should stop dreaming and get to work. It has been 30 years now and I think these admonitions still hold true. One may wonder how come nothing much was done in the last 30 years to address this issue. Perhaps, we should accelerate the process.

The only way we can uphold the efficiency of the civil service is to make sure that the best are chosen to run it. Passengers should be discarded as they not only give the service a bad name, but also affect those who work hard to earn their keeps. In this way, top officers in the public sector can justify their treatment on par with the best in the private sector.

I am in perfect tune with the Prime Minister in his impassionate plea to have the best to run the Cabinet and the civil service. But we have to convince the public that we do have the best when we pay them, and that the not-so-best, or the bad ones, are in fact removed from the service. Only then can we drive home the message that we run the best civil service and the best Cabinet in the world.

Mr Chiam See Tong (Potong Pasir): Sir, President Kennedy said, "Ask not what your country can do for you but what you can do for your country". Today, we are in Parliament for exactly the opposite reason. The Ministers are not telling Singaporeans what they can do for them but are asking Singaporeans to pay them more money. It is not that long ago in this House, in January this year, that Ministers' salaries were revised upwards to about $64,000 per month and the Prime Minister's salary to about $96,000 per month. With that kind of salaries, most Singaporeans thought that the Prime Minister and the Ministers were already overpaid but apparently they thought otherwise. Now the Prime Minister and the Ministers want even more pay. Why do the Ministers want so much money for? People are already saying that to be appointed a Minister is like touching a lottery.

If we compare our Ministers' salaries with those of the other developed countries listed in the table, which I have instructed the Clerk to distribute to Members, you will note that our Ministers earn about 2 1/2 times more than the President of the USA, 3 1/2 times more than the Australian Prime Minister, five times more than the Canadian Prime Minister, four times more than the Prime Minister of England, and nearly five times more than that of the Prime Minister of Sweden. If the Prime Ministers of those advanced countries can live on 1/5 to 1/4 of our Ministers' salaries, why should our Ministers ask for more pay?

How can our Ministers justify their salaries when we take the American President's salary as a yardstick? The President of the USA is the Chief Executive of the country and is responsible for about 250 million people. Whereas a Minister in Singapore is not the Chief Executive of the country and there are only about 3 million people in Singapore. Can we say that our Ministers shoulder more responsibility than that of the President of the USA, or they do more work? Surely not. Whatever way we look at it, it is just not right to pay our Ministers so much more than that of the President of the USA.

The White Paper says that Singapore needs to pay our Ministers high salaries to attract competent men, to compensate them for the loss of their privacy and to prevent them from becoming corrupt. These reasons are faulty.

I do not believe that there are not enough competent men in Singapore who can qualify to be Ministers. The true position is that there are many good men out there who are of ministerial calibre. It is just that the PAP is unwilling to pick them for reasons of their own.

At one time, the High Court in Singapore was very short of Judges. There was a clamour to increase the appointment of more Judges. The Government gave the excuse that it was difficult to find suitable candidates from amongst practising lawyers to sit on the bench. What happened after that? The backlog of cases piled up. The Government relented. The Government in quick succession appointed the requisite quota of Judges from amongst practising lawyers. All those members of the bar in the past who were probably thought not suitable were elevated to the High Court bench and have since proven to be magnificent Judges.

The Government could do the same by inviting good professionals with a record of integrity to become Ministers. Most professionals would be highly flattered and honoured when invited to become Ministers and would probably accept the invitation. I would think that most of them may not want to be Ministers for life, that is, until retirement due to old age but would certainly not mind doing a two term or two-and-a-half term stint.

In regard to the selection of Ministers, the Government should open its doors wider, as it did in the case of the selection of Judges and all the Ministerial posts would be quickly filled, instead of the situation now where some of the Ministers are made to take care of two Ministries.

As regards the loss of privacy, I do not think that there would be a problem there. The Ministers are more than compensated in fringe benefits, such as, travelling in first class, staying in posh hotel suites, or have the opportunity to visit foreign lands. Ministers also meet dignitaries, kings, queens and heads of states and other famous personalities, which an ordinary person, even how rich he may be, may not be able to do so. What the Ministers lost in privacy are amply rewarded elsewhere and they need not be exorbitantly compensated in terms of high salary.

As for corruption, I think the Government, after nearly 30 years in power, is now experienced enough, especially after the unfortunate appointment of past corrupt Ministers, like Tan Kia Gan, Wee Toon Boon and the late Teh Cheang Wan, not to appoint anyone who has the propensity to be corrupt. In any event, financial incentives cannot prevent a Minister from being corrupt. If a Minister is intent on being corrupt, the hefty salary will not satisfy him. It will make him only more greedy for more money. The high salary paid to him will allow him to enjoy a high standard of living, such as living in a nice house and purchase expensive cars which can be a veil of his ill-gotten money, if he were to be corrupt. So the argument that you pay a Minister well will prevent him to be corrupt is quite fallacious.

I am not saying that the Government should pay Ministers peanuts, neither am I advocating exorbitant salaries to make them millionaires once they are appointed.

I still believe that political leadership is a calling. Political leadership posts should not be turned into lucrative jobs. By turning those posts into lucrative jobs, we are not going to attract people motivated by a calling but people who are attracted to politics because of money.

The idea of setting benchmarks for Ministers' salaries based on the top four highest private sector earnings in banking and amongst accountants, engineers, lawyers, CEOs of manufacturing companies and multi-national companies is objectionable. In principle, it is wrong. Ministers must at intervals of time come back to Parliament to ask for and justify their pay increases and also for the pay they are receiving. This principle of accountability of the Ministers in respect of their salaries must never be taken away. The day it is taken away, the seeds of corruption would have been sown.

How can we know for sure that once a benchmark, as proposed, has been set, the Ministers will not engineer to make sure that they get hefty pay increases every year by encouraging the private sector to increase the pay of its CEOs? After all, many of the big companies such as privatised Telecom and SIA are Government controlled. Also, many of the big manufacturing companies, banks and multi-nationals have close connections with the Government, as they can be influenced. If Ministers believe generally that they deserve pay increases and can justify them, what is there to be embarrassed or feel uncomfortable about. They should not be afraid to come to Parliament to ask for those pay increases. And if Ministers feel that it is not proper for them to canvass for their own pay increases which, in my view, is indeed not proper for Ministers to be asking for their own pay increases, they could get Government MPs or, even better still, get Backbenchers to do it for them.

Another way is to get an independent committee, like the National Wages Council, which determines workers' wages, to study and recommend from time to time how much Ministers' salary increases should be. Anyway, I think it is improper for Ministers to be asking for salary scales which would make them millionaires more than two times over in one term of office.

Ministers promote Asian values and Confucian teachings. Perhaps the Ministers in their more sombre moments, should take notice that Confucian teachings hold up yao and shan as models for other rulers to follow. They were unselfish and public spirited and believed that the position of the ruler should not be a source of wealth and personal benefit. I do not recommend that Ministers make big personal sacrifices like the Confucian models, neither do I advocate hefty pay increases as recommended in the White Paper.

What I am recommending is based on the principle that the Ministers' job is a calling. It is a public service and cannot be anything else. If the Minister's post is going to be another highly paid job, how can Ministers have the moral authority to lead the country? How can our Ministers be role models? How can they preach against materialism and warn of the decay of society once it wallows in materialism? The founders of modern Singapore preached against materialism. They called on the people to practise thrift, to sacrifice and to do hard work. Mr Lee Kuan Yew himself took a pay cut. That may have been the catalyst to Singapore's success.

The proper thing to do is not to peg the Minister's salary to those in the private sector, but to determine an amount objectively which will provide Ministers with a comfortable lifestyle. I have assessed that a Minister can lead a comfortable lifestyle if he were paid $32,800. I have asked the Clerk to circulate my assessment to Members.

In addition to the quantum assessed, I think it is fair to add 25% more to cover for any unforeseen circumstances or contingencies and a further $10,000 to pay for the Minister's income tax, if any. The final amount paid to the Ministers shall be about $51,000. I think that is a very fair assessment. In fact, it is on the generous side.

As for the Prime Minister's pay, a 25% premium over and above a Minister's salary shall be given and it is at $63,750 a month. This follows the precedent developed in advanced countries where the Prime Ministers are normally paid about 25% more than their Ministers. It is all in my table.

I am a practising lawyer. In the course of my work, I need to assess the monthly maintenance given to a spouse or to a child. I also do work in assessment on how much an injured person can get. All lawyers also need to assess the cost they should be paid. In those types of work of assessment as a lawyer, I have to be objective. I do not just pluck figures from the air. Accordingly, I dare say that when I assess the Minister's pay, I have been objective in doing so. The $51,000 a month salary for a Minister and $63,750 a month for the Prime Minister are, I would say, fair salaries for them.

Now, I would ask whether the Ministers and Prime Minister accept those salaries respectively. I wish they could give me an answer today. If not, please let me know the reasons for not accepting them.

[Mr Deputy Speaker in the Chair]

5.06 pm

Mr Zulkifli bin Mohammed (Jalan Besar GRC): ( In Malay): Mr Speaker, Sir, like my PAP parliamentary colleagues, I support the principles and recommendations contained in the White Paper.

Since it was released about 10 days ago, there has been a fair amount of reservations and cynicism among the general population. This is apparent in the arguments of the Opposition Members who are not in touch with reality. For the general population, their reservations arise from the perception that the benchmarks recommended are excessive and not commensurate with the tasks and responsibilities of Ministers since, as senior public officers, Ministers are already enjoying perks and privileges to compensate for their personal and financial sacrifices. As far as I know and I believe many know too, the true situation is far different from what many perceived it to be.

Mr Deputy Speaker, it is regretful that there is still such negative talk, including from the highly-educated, who should be more discerning and rational, given the fact that this is not a new issue but has been debated I think for almost a decade now, only more thoroughly so in the recent years. But the fact remains that there will be no end to the cynicism because most politically-related issues appeal more to the emotions than to logic no matter how much information and explanations are given. A short while ago, we have heard the Prime Minister reiterating the rationale and the philosophy behind the recommendations of the White Paper.

Mr Deputy Speaker, it is essential that the people do not lose sight of the philosophy behind the White Paper. They need to understand that this is an issue of national importance, as already explained at length, and that this concerns the question of ensuring competent political leadership to ensure a good government. Surely, it is not difficult for people to understand that there is a nexus between their own future and having honest and competent people in government. In this regard, our Prime Minister has repeatedly said that the Government's policies and actions, as decided by the Cabinet, will determine whether Singapore continue to survive and prosper, with its people able to enjoy quality of life, or go downhill, which will result in misery and suffering.

Sir, the crux of the matter is to ensure that people of calibre from each generation join politics and thereafter become Ministers. It is upon the shoulders of the Ministers to protect what we have achieved so far and it is also upon the shoulders of the Ministers that we place the task of continuing the process of improvements and renewal in the future. It would be irresponsible of us to ignore the reality that it is becoming increasingly difficult today to attract our best talents to go into Government against the scenario of a buoyant economy, both domestically and externally, with salaries in the private sector far outstripping salaries in the public sector. If we do not want our bureaucracy to deteriorate, we have no option but to be competitive with the market. Bringing the salary levels of our civil servants closer to market levels is the right thing to do.

Sir, in my view, the recommendations in the White Paper are pragmatic, as adequate research and preparations have been done in the search for a long-term solution for salary adjustments for Ministers and senior public officers. In this connection, a relevant question to be asked is: is the recommended formula transparent and accountable? Not many people realise that this is in fact one of the main objectives of the White Paper, ie, to enable the majority of Singaporeans to see and judge for themselves the details of how and what Ministers are paid. In my view, the benchmarks recommended are reasonable as they are still below private sector levels. Furthermore, the proposed salary revision will be done gradually over a period of three years and beyond. Although I can go along with the proposal for a one-third discount for the Ministers' benchmark as recommended, what the people should remember is that there are aspects of the Minister's job for which it is difficult to draw a comparison, such as the political responsibility of persuading and carrying people along to support unpopular and painful policies which are for the long-term good of the country.

Sir, like everything else that is new, we must give an opportunity for the formula to be implemented and tested. I also support my colleague's suggestion that the White Paper be discussed thoroughly before we come to a decision. What the people also want to see is the Government's assurance that should the scenario change, the formula to be implemented can be adjusted accordingly. This is very important if we want to avoid this issue being manipulated by irresponsible parties. We have witnessed how this point can be manipulated just a while ago. Although recommendations have been made, we have to wait and see whether we can draw potential candidates to enter politics and take part in managing Singapore.

Mr Deputy Speaker, I am also of the view that it is equally important to find more effective ways to raise the political awareness of our people, in particular the younger generation, so that more of them will get involved in the political process and become politicians in the long run.

Mr Deputy Speaker, on this note, I support the recommendations of the White Paper.

5.17 pm

Dr Lee Tsao Yuan (Nominated Member): Mr Deputy Speaker, Sir, I have three major comments on the White Paper.

First, I agree that it is imperative for Singapore to continue recruiting top talent into the public service. I agree that good Government is important for any country. It is particularly important for a small country like Singapore, which has relied on its ability to do things, and to do them well to succeed economically. A sound macro-economic environment, telephones which work, airports which are hassle-free - these are all part of what makes Singapore tick, especially a successful regional business hub. Although salaries are not everything, I do agree with the rationale that those who hold public office should be paid well. It does help to keep the system honest and transparent.

Second, I agree with the rationale of benchmarking salaries. Better a system of benchmarking than large adjustments every four, five years which cause unhappy ripples in the private sector and the population at large.

Third, I have, however, a number of questions regarding how the benchmarking is done, or the methodology of benchmarking, and its consequences. The White Paper is very well written. I must commend the civil servants who did quite a bit of the work in writing the White Paper under the supervision, of course, of the Ministers. It shows that considerable thought has gone into making the case for benchmarking. I am sure that much more analyses have been done than what has been presented. I would only wish that some of these analyses which are not in the White Paper could be shared with the public at large. Four questions remain in my mind after reading the White Paper.

First question: Why make the benchmarks person-based, ie, the average of the top four persons, or the 15th person of age 32? Please allow me to give an example. Suppose that in Year 1, individuals A, B, C and D are the top four in one of the six professions. Suppose that their average base salary is $500,000. They choose to exercise their stock options that year, and gain an average of, say, $1 million. This makes their average income $1.5 million for that year. Suppose that the following year, these same individuals - A, B, C, D - do not exercise any more stock options. Their average salary goes down to $500,000, which is their base salary. But another group of four individuals - W, X, Y and Z - who have an average base salary of $450,000 and therefore were not among the top four in Year 1, now exercise their share options and gain $900,000. This pushes their salaries up to $1.35 million, and they become the new top four in their profession. The benchmark therefore moves from $1 million in Year 1 to $1.35 million in Year 2. But the average salary of A, B, C and D over two years is $1 million, and that of W, X, Y and Z is $900,000 over the two years. Over a longer period of time, these salaries are likely to be even less, depending on the extent to which share options are given and exercised.

A similar example can also be given for profit-sharing, or profit-related bonuses of senior partners in professional firms. One unusually large, plum job can cause profits and profit-related bonuses to jump. In other words, stock options and profit-related bonuses can cause salaries to rise to very high levels in certain years, which may not be representative of the average over time for these same individuals. If the idea is to benchmark public officials' salaries with those of the top people in the private sector, then taking the average of the top four in six professions, or 15th person, would result in an over-estimation of these salaries, as these top four could be different individuals in every year.

Please allow me then to put forward an alternative proposal for consideration. Instead of a person-based benchmark, why not use a percentile-based benchmark? For example, take the top 10th percentile for Ministers, and top 20th percentile of persons aged 32 for Superscale G officers. At this point, I must say that I am hard put actually to recommend a specific percentile without sufficient figures in front of me. Is it top ten? Is it top 15? Is it top 20? To me, that really depends on what the figures are like and because I do not have them here, it is difficult to pinpoint a certain number. The important thing is the principle of percentile-based benchmarking instead of person-based benchmarking.

A percentile-based system is used by Hay Management Consultants, a well-known human resource consultancy firm which has 100 offices in 30 countries. Twice every year, they conduct a survey of top management salaries over 90 large companies in Singapore. They evaluate the jobs of CEOs and senior management, determine their job sizes. For the job of a CEO of a company which sells only one product in the Singapore market is quite different from the job of a CEO which oversees multi-product operations in the entire Asia Pacific region. And hence their job grades. This is in order to compare apples with apples in terms of job grades. They then determine salaries for each job grade, and publish the overall results. Companies choose whether to peg their salaries at the top 10th percentile, top 25th percentile, or at the median, the 50th percentile.

I am also given to understand that in Singapore, a group of about 10-20 large companies get together on a regular basis to share salary information. Each company then decides where they want to be. One company decides to be a market leader and to peg its salaries within the top 10th percentile. Another company may decide to peg its salaries at the 50th percentile.

In both of these examples, which are actually used in Singapore in the market, percentile-based benchmarks are used. The percentile-based benchmark is broader. It uses a larger sample and is therefore less affected by outliers.

A related point is regarding the base for benchmarking. Conceptually speaking, there are two types of benchmarking basis that can be used. The first, pertaining to Ministers, is what the person would have earned if he or she were still in his or her previous occupation. By using this base benchmark would result in individualised salary schemes for each Minister, and might result in large differences across Ministers. I think that is very unsatisfactory. The second concept, which is the concept used in the White Paper, is to adopt the nearest private sector equivalent. I agree with this conceptual approach. If percentile-based benchmarking is adopted, I have less reservations with the use of the base of six professions. But since a Minister's or civil servant's responsibility is closest to that of corporate management, why not use only those in corporate management as a base for benchmarking? For example, the ministerial benchmark could be the top 10th percentile of all local Executive Chairmen and CEOs, including managing partners of professional firms. I would like to add here that my point is not so much against $800,000 for Ministers. Ministers can be paid a million dollars, $1.5 million. I think the point is that in terms of benchmarking, let us choose as accurate a benchmark as possible.

Second question: What happens if there is an economic slow-down and private sector salaries, which have a large profit-related component, decline? Will Ministers and public officers' pay also decline? If so, then we could have the anomalous situation that, because of the two-year lag, the decline comes at a time when there is economic recovery, and Ministers and public officers' salaries fall when their counterparts' salaries rise. Think of 1985 and 1987, for example. Or their salaries register a significant increase in a recession year (1985) because the benchmark was 1983 when Singapore was doing well. One way around this, given that the two-year lag is inevitable, is to take a two-year or three-year moving average to smoothen out year-to-year fluctuations.

Third question: What are the macro-economic consequences of the proposed benchmarking? I can think of two. The first is domestic. Currently, top public sector salaries lag behind those in the private sector. With the implementation of benchmarking, the short-term catching up process will cause average executive salaries to rise even if private sector salaries remain the same. But the question is: will private sector salaries rise eventually because of benchmarking? There is only a limited pool of the best and the brightest who are wanted by both the Government and the private sectors. Will benchmarking cause a ratcheting upwards of executive salaries in Singapore? Will there be an increased demand for cars, property and other high-income goods, causing prices of these goods to rise? Will there be a high-end wage-price spiral? I would feel more assured if we could have the Government's assurance that there will not be any significant competitive ratcheting up effect on senior management salaries, nor an ensuing high-end wage-price spiral.

There is another possible related macro-economic effect, and that is, on our competitiveness. I asked some MNCs in Singapore for some comparative statistics of managerial salaries. These make for some of the best international comparisons, for MNCs have offices worldwide, and they have standardised job grades and are able to compare salaries with the same job grade. One MNC showed me a comparison of 1994 salaries for a division manager - roughly someone who has been 10-15 years with the company and is a good performer. In nominal terms, the Singapore salary (base salary plus bonus) is higher than that in Germany and th US; about double that in Australia. In fact, Singapore is the second highest on the list after Japan. In another company, a leading US MNC in the computer industry, a Singapore senior manager is paid, in nominal terms, higher than his American and Australian counterparts, but lower than those in Hong Kong, Japan and Germany. There are, of course, many difficulties with international comparisons, but these are rough figures. Singapore's middle and senior management salaries, even when compared with those of developed countries, are already not low. The comparison with developing countries is even more stark. The fact is, as some tell me, that Singapore's salary curve is steep by international comparison. This is in part reflective of the scarcity of top talent in Singapore. My question is: will benchmarking - and the public sector is Singapore's largest employer, I believe even for senior positions - have a negative impact on competitiveness? Or will benchmarking, by enhancing good Government, have a net beneficial impact?

Fourth question: This pertains to the Administrative Officers. Salaries are an important, but not the only determinant of job attractiveness. There are only so many Permanent Secretary posts, so many CEO positions of statutory boards. A top-grade person aims eventually to be at the top of his or her organisation. The provision of challenging, attractive jobs with decision-making empowerment is a major challenge for the civil service. Does the Government have such plans? I am glad to know from the Prime Minister today that the Government indeed does.

To conclude, allow me to reiterate my three main comments. I support the rationale for paying Ministers and senior civil servants well in order to keep public service attractive. I agree with the rationale for benchmarking. I have, however, four questions regarding how the benchmarks are formulated and what their consequences are. I hope that these questions can be answered, and the benchmarks fine-tuned. I know that many of these questions have already been examined within Government. I wish that the Government would share their further thoughts with us on this process.

Mr Charles Chong (Eunos GRC): Mr Deputy Speaker, Sir, thank you for allowing me to join in the debate on the motion moved by the Prime Minister.

First of all, I would like to take this opportunity to congratulate the newly appointed NMP who spoke before me on a very well-delivered maiden speech and I am sure Members will look forward to hearing more such speeches.

Sir, I support the principle that competitive wages must be paid to Ministers and civil servants if the Government has to compete with the private sector for talent. However, I am not completely convinced that just by paying higher and higher wages we will always be assured of competent and honest Government. The title of the White Paper "Competitive Salaries for Competent and Honest Government" appears to imply that we will get competent and honest Ministers and civil servants if only we pay competitive wages. Even the World Bank Report quoted in the White Paper, and repeated by the Prime Minister, that Singapore bureaucrats are perceived to be the region's most competent and upright because they are paid the best, appears to be an over-simplification. If that was indeed the case, then I think we should not limit Ministers' salaries to just two-thirds the average income of certain professionals in the private sector. Neither should we limit the salary of Superscale Grade G officers to the 15th position of private sector professionals. Why not be doubly sure of getting good Government by doubling the incomes of Ministers and civil servants compared to the private sector? With the budget surpluses we generate in most years, we can well afford to assure ourselves of good Government for several hundred years or more. The problem would easily be solved if money was the only issue involved in getting good people into Government. But, unfortunately, this may not be the case.

The White Paper does mention very briefly that salaries should never be the motivation for persons to become Ministers. However, it did not address non-monetary measures that could attract more talented people into Government. If the objective of the White Paper is to consider ways to ensure that Singapore will always have good people in Government, then it is equally essential that the non-monetary aspect be considered as well.

Mr Deputy Speaker, Sir, on civil servants, the White Paper mentions that the Administrative Service is the premier service in the civil service. It goes on to mention that the PSC, in recent years, has been recruiting only 10 to 12 officers per year from a cohort of 40,000 to 50,000. This statement implies that only the best 10 to 12 from each cohort are selected for the Administrative Service. I would like to ask if indeed the best of each cohort were chosen, or was it the best 10 to 12 of only those that applied to join the Administrative Service that were chosen.

The Prime Minister has already pointed out several examples where outstanding `A' level students did not apply or decline PSC scholarships. If that was the case, then in all probability there may have been better ones from each cohort that have slipped through the net. The Administrative Service should, therefore, not limit itself with promotions from just within its ranks. The best, as defined mainly by academic results at the beginning of their careers, need not necessarily remain the best after 10 years in their careers.

The civil service should consider taking in mid-career officers at every level not only from the public sector, but should also consider those that have established good track records in the private sector. If civil service officers aspire to have equivalent salaries to that of the private sector professionals, then they must be prepared to accept the same competition faced in the private sector.

Private sector professionals face not only competition from other private sector professionals, but also from officers from the public sector trying to move into the private sector. In many areas, they also face international competition in the form of expatriate professionals. While I support that civil servants should be paid competitive salaries compared to the private sector, I also feel that they should not be insulated from the competition faced by their private sector counterparts.

On the subject of Ministers' salaries, I think a different approach other than just salaries may have to be considered as well. I notice with interest the increasing number of applications we have been receiving for NMPs since the scheme was started several years ago. While there has been no overwhelming rush of high calibre people with integrity, clamouring to get into Parliament as Ministers or as elected MPs, we do not appear to have the same problem with NMPs. I am aware that NMPs are not in Parliament for the sake of money. The amount they receive may make even an elected Backbench appear to be slightly overpaid. So it is something more than just salary that attracts them into Parliament. Perhaps, it is the lack of onerous responsibilities that are carried by the Ministers or even the elected MPs in their constituencies. What could be more attractive than to be able to take part in the decision-making process, but not be held responsible or accountable to the electorate for these decisions. Whatever the attractions, money is not the main issue.

Our Ministers, on the other hand, carry heavy responsibilities, some of which have already been highlighted by the Prime Minister. They are also held responsible for their decisions. In many cases, they have to carry more than one portfolio. In one case, where there is no portfolio, the Minister is responsible for all the workers in Singapore. They are also not exempted from constituency and municipal responsibilities in their wards. And they must face the electorate every four to five years.

Perhaps if some way could be found to lighten their burden, then we may create a situation where the talented and the honest would want to get into Parliament as Ministers and not as Nominated MPs. I, therefore, feel that we should consider not only the monetary issues if we really want to solve the problem of ensuring that Singapore always has good Ministers and that the electorate would be sophisticated enough to continue electing them into office. Until we can find such a solution, we should not add financial sacrifice as another obstacle in the way.

Sir, I therefore support the principles set out in the White Paper. But I hope that it can be further refined before it becomes policy.

Assoc. Prof. Walter Woon (Nominated Member): Mr Deputy Speaker, Sir, there is nothing more likely to bring out the basest instincts of greed and envy than knowing what other people earn. How much to pay has been a thorny issue not just for politicians but for the private sector all over the world.

I was listening very carefully to what the Prime Minister said and I found myself agreeing with most of what he said. Most, but not all. It is true you cannot have cut price governments. Cut price government is incompetent government. And you cannot rely on pure altruism to get people to take on the very, very onerous duties, as Mr Chong has pointed out, of being an elected representative and being a Minister. I think it is unrealistic to expect that. In a country with 250 million people, maybe you can find enough altruists. In a country of 2 1/2 million people, I think we are putting too much in faith in altruism to expect people to come forward, if they are expected to make big sacrifices.

Where I part company with the White Paper is on the question of what is a big sacrifice and what is a competitive salary. How much should be paid? If we look at the White Paper, the first question that comes to my mind is: Who drafted this? Can I take it that it was drafted by civil servants? Am I right? Is it drafted by civil servants? Because if it is drafted by civil servants, then we have a bit of credibility problem, have we not? If we look at page 13, last paragraph, for example, it says that "A good Administrative Officer will easily rank among the top 15 in his cohort in terms of ability." Who says so? Is it the civil service that says so? Is it the Administrative Service that says so? Is this a statement of fact? Or is this a statement of ideals that we are trying to achieve? I think a lot of people would be much happier with the White Paper if we knew that this White Paper came from an objective external source and was not just what the civil service thinks they should be paid. I think that is the nub of many people's concern with this kind of thing.

Of course, there would be people who would begrudge salary increases because of envy, because of political ideals, or because of idealism. But I am not one of them. I do not envy the Ministers their pay, I do not envy them their job. I know how hard they work. I know how hard the elected politicians work as well. When we look at something like this, we are asked to make a decision on the basis of incomplete information in a sense. Because we do not really know what other possibilities there are.

Why the top 24 people? Why were these 24 people taken? It is an arbitrary figure. Why the top 15th person in that cohort? It is an arbitrary figure too. I think the approach taken by the White Paper is to look at how much the top professionals earn and say that Ministers should earn just as much. I am not sure that that is the right question to ask. Is it really the right question to ask yourself how many people are earning more than you in your cohort? I am not really sure that that is the right question that we want to ask.

I think the right question that we should ask is: Are we paying enough to our Ministers and to our civil servants so that they can maintain a decent, comfortable lifestyle? When you talk about sacrifice, there is a world of difference between the lifestyle of a person who earns $50,000 a year and a person who earns $250,000 a year. But there is not that great difference in quality between someone who earns $500,000 a year and $750,000 a year. Because once you get beyond a certain absolute level of pay, the extra money that you get is just savings. Unless you have extremely extravagant tastes, how many cars can you drive? How many houses do you want? How many country clubs do you want to join? So really the question I think that we should be asking ourselves on the present salary that we are paying Ministers is: are they really being asked to compromise their style of life?

We look at the entry level for Ministers, in round figures, $600,000 a year. Let me just get a bit of information, if I may, from the Cabinet. How many Ministers feel that on $600,000 a year, they cannot live a decent lifestyle? That they cannot pay their mortgage on $600,000 a year? Any Minister having difficulty buying a car on $600,000 a year? How about paying for their children's education? They cannot afford a holiday abroad? I do not think any reasonable person can say that $600,000 a year does not give him a decent lifestyle.

So if we start from the premise that $600,000 already is a good figure, does it really matter to any Minister that his peers could be earning twice or three times that? Does it really matter? This is what I am asking. Because if it really matters to someone, should he really be a Minister? Should he just go out into private practice and satisfy his craving for material things? I am not sure we are doing the right thing by encouraging this constant comparison with other people. You know that if you go into certain jobs, that there is a trade off in terms of pay. But if the pay is high enough, the trade off in terms of lifestyle is not so great.

I listened to Dr Lee Tsao Yuan's speech with great interest because she provides an alternative to the benchmarking here. I do not think many people will quarrel with the principle that Ministers' pay should go up and down with the private sector's pay. That public sector employees' pay should go up and down with the private sector. I think what bothers most people, what makes it difficult for people to accept the recommendations of the White Paper, is the level at which these salaries are pegged. If we say that $600,000 is a fair figure, let us use that as a base. Calculate an index based on the salaries of, say, the top 50 CEOs in Singapore, the top 100 professionals, or whatever you like. Call that base 100. Calculate the index every year. If the index goes up by, say, 10% next year, then move your salary up from the base of $600,000. But do not peg it at an arbitrary proportion of what you think the private sector would get.

I am not an economist. I do this just off the top of my head. It may not be practical. It may not be acceptable. This is the problem. We do not have enough information. It would be valuable if we could see what sort of alternatives and if we could have figures to show us what these alternatives are.

When we talk about the public sector pay, not Ministers' pay, one of the problems with public sector pay, being pegged at private sector rates, as has been pointed out by many of the hon. Members from the private sector, is that the public sector does not function exactly the same way. If you want private sector pay, you should be subject to private sector discipline. A CEO in the private sector is running up a sand dune. If he stops running, he starts sliding back. There is no such thing as sitting down and watching the world go by.

A public servant is more like climbing a tree. Once you get to a certain branch, you could sit down and you could admire the view. And unless you do something really stupid, nobody is going to push you off the branch. That is the problem.

The trouble is that people do know Superscale officers. I know several. I am sure everybody knows several. There are many Superscale officers who are worth every penny we pay them and more. But there are also some Superscale officers who do not deserve even the money that you pay them. In the public sector which does not demote and does not fire, does not sanction people for inefficiency, you get the tendency for people to cruise after they reach a certain level. You get a situation where someone has reached Superscale and thinks, "OK, I am happy now. I don't have to do anything more. I really don't want to be a Permanent Secretary. It is all right. I do the bare minimum so as not to be sacked."

The deadwood will accumulate. Do we have any assurance that this deadwood will not be there forever. I think I would be much happier with this if we could have some assurance that if there are going to be increases in public sector pay, there will not be indiscriminate increases so that every Superscale H officer gets it regardless of whether the fellow is still performing or whether he stopped performing years ago when he reached Superscale H.

A large proportion of any increase will have to be performance related, so that if a person thinks that he can stop and start cruising until retirement, his pay will be cut. There should be no such thing as deadwood taking advantage of the fact that in the public sector, people very rarely get demoted, very rarely get sacked, for inefficiency. They get transferred to places where they cannot cause trouble, but they still draw their salary. That is the problem.

One final word about all this. Since we are so keen on private sector comparisons, may I point out that the board of directors of a company does not set its own pay for obvious reasons. It does not set its own pay. The prerogative of setting the pay for the board of directors belongs to the shareholders.

The principle in this White Paper is a very important one because it sets the tone for our public service, for our Ministers, for years to come. I think it is important enough that the shareholders of Singapore Incorporated should have something to say to this. May I suggest, not just a Select Committee, that this is important enough to go to the public on a referendum.

Talking in this House, in a sense, is preaching to the converted, because all of us know what kind of sacrifices are made. But for the average person, there is a certain amount of resentment. From my conversations with various people, there is enormous resistance to the idea of paying so much. The danger of creating the impression that the top slice of the Mandrinate is promoting itself and paying itself is that you create cynicism about the leadership. You create cynicism about the people who are governing and running the country. This cynicism is not healthy at all, because it may translate into a backlash against meritocracy. The idea that everyone is equal is very seductive, enormously seductive. And if the average person feels that it is a small group at the top that are paying themselves very well and picking the same type of people, scholar-types, good 'O' levels, good 'A' levels, paying themselves, you might get this kind of backlash against meritocracy which would be disastrous for all of us.

So if you really want legitimacy for this kind of thing, may I humbly suggest that we have a referendum. Then we will settle the question once and for all. Give people a series of alternatives, but at least the problem will have been debated, the people will have chosen, the matter will have been solved, hopefully. If this White Paper is reasonable, then I think we should have some faith in the common sense of the average Singaporean. If most people consider it unreasonable, then to put it through Parliament will not silence the grumblers. It will not silence the cynics. It will only give ammunition to those who say that we are being run by a group of very highly paid people who do not understand the concerns of the average citizen. This is what is going to happen. May I say once again that if we are interested in private sector comparisons - the directors do not set their own pay, the shareholders set the pay - put it to a referendum.

Mr Imram bin Mohamed (Nominated Member): Thank you, Sir, for giving me the opportunity to express my views on the White Paper.

Whilst I do not disagree with the principle of setting benchmarks for Ministerial and senior public officials' pay, I feel very uncomfortable with the proposed formula which pegs their salaries so precisely to the few top earners in the private sector.

Mr Deputy Speaker, Sir, the salary proposal will send confusing messages to the masses. On the one hand, the public were told that they should make only moderate claims for wage rises. These should trail productivity increases so that Singapore can remain competitive. On the other hand, the public are now told that for the same reason, the Ministers' salaries must be increased by leaps and bounds. The explanation offered is that Ministers must be paid their market worth. If this can apply to Ministers, why should it not apply to others too? A taxi driver would question why he is not allowed to vary his charges to market conditions. For instance, during festive seasons or at other times where there is a high demand for taxis, he should be able to up his fare.

The general public will not be able to understand why we need to pay top dollars to attract or retain Ministers. Ministers are already receiving comfortable salaries. Besides, the job carries with it many other tangible and intangible benefits. For example, the level of prestige associated with the position can hardly be matched by any top jobs in the private sector. If, in spite of all this, people still turn away from the job, it must be for reasons beyond money or perks.

Our Ministers are leaders of our nation. Theirs is a noble profession. And as the White Paper states, salaries should never be the motivation for persons to become Ministers. Ministers' salaries are already high by any standard. We may be doing harm to the value of public service by further equating it to high monetary rewards. We need to guard against a possible erosion to the sense of pride and dignity in public service.

Apart from being an economic leader, our political leaders are looked upon to also provide strong moral leadership. This aspect of the leadership role is important, as high moral values are indeed crucial to the long-term success of a nation. And one value that our leaders could help instil in our young is that good moral leadership cannot be bought.

With regard to the Administrative Service, the Government intends to recruit bright graduates into the civil service. I agree that we need to pay salaries comparable to the private sector in order to attract these young people. However, to peg their income at age 32 to the 15th position in the six professions in the private sector may be overly generous.

The private sector works under a different set of rules from the public sector. Monetary rewards may not reflect academic excellence. The brightest graduate who joins the private sector will not necessarily become the top earner at age 32 or at other points in his career.

Sir, one of the objectives of this exercise is to retain talent within the Administrative Service. However, will it work totally? Good public officers, after having served in Government departments and having established a wide network of contacts, would be worth a great deal to the private sector. The latter will be willing to match whatever salary they are getting. Therefore, attrition of some of these people is inevitable and Government should prepare for it in some other way.

In conclusion, I feel the benchmark salary should be derived from a broader base, rather than be narrowly fixed to the 15P 32I, as suggested. We could perhaps consider the top, say, 5% earnings of all the eligible professionals rather than from a limited number of professions. This should give a more realistic measure of the top earners.

Dr Arthur Beng Kian Lam (Bedok GRC): Mr Deputy Speaker, Sir, the reason we are discussing this issue of benchmarks in salaries for Ministers is because of the conviction we share that competent political leadership is crucial to good government. While some may disagree on the basis of benchmarking, it is my belief, after discussions with many, that our Ministers are well respected for their abilities and integrity. Many share the feeling that they are deserving of better salaries for their scope of work responsibilities and sacrifices.

The Prime Minister has mentioned that no Minister has asked for a salary increase. However, when it comes to benchmarking, there are many different approaches and views. Often, after some discussions, one finds that we are actually not at all discussing an issue based on the same parameters. We are not comparing apple with apple. The discussion is far from objective. Why the difficulty in this issue of salaries?

Firstly, for some, the absolute dollar value of a Minister's salary itself, some $600,000, now to be raised to $800,000 per annum, is difficult to imagine. This is because when this refers to the CEO of a multi-national company, the CEO is an abstract figure. However, when it comes to a Minister, a household name, or the MP-Minister that I have just met on Sunday, it becomes someone very real. You mean he is earning so much more than me? You mean he requires or he is deserving of such a hefty pay rise? Objectivity is lost and subjectivity sets in. We must realise this. Mr Ling How Doong must realise this.

Secondly, when we refer to the value of a Minister, we often remember him as a candidate who first entered politics. For some, a decade ago; for others, many decades ago. Thus, a Minister is remembered as a former civil servant, a former Army officer or the professional or businessman that he was. So the benchmarking starts from that very point. If he had remained a civil servant, Army officer or businessman, would he command this salary today? This again is the rationale of Mr Ling How Doong. We forget that the candidate for first election 10-15 years ago has undergone a severe test on the job and is no longer that same person. The management, leadership and political skills acquired makes him the Minister he is today. He is very much a value added person.

Thirdly, the lack of empathy for the risks and public responsibilities of a political career. And I think that this is an area which has been under-emphasised in the White Paper. For obvious reasons, the White Paper and the Frontbench cannot elaborate too much or dwell on these issues because they may be seen to be "blowing their own trumpets". Therefore, it is difficult for the public to understand what this means in real terms - risks and public responsibilities. What is seen is that the Minister is a self-confident CEO, surrounded by competent civil servants, escorted by security officers, enjoying all the perks, pomp and pageantry at official functions. He is a person who is perceived to have a very secure job. Does he need to be so highly paid? After all, he seemingly enjoys his position, and his family also enjoys this. As Mr Ling has said, whenever he goes overseas, it is a paid trip. By the way, I did not compare notes with Mr Ling. It just happens that I seem to have hit on the same key point that he has hit.

However, Mr Ling has not mentioned the flip side of this image. If the Minister loses an election, he loses his job. He is not assessed by one boss - the Prime Minister - but by his whole electorate. For a single Member constituency, the candidate has some 25,000 to 30,000 assessors, and this is only at level one. At level two, he needs to satisfy the party cadre members that he has done a good job on a national basis. At level three, he needs to satisfy his parliamentary colleagues, and at level four he needs to satisfy the Prime Minister and the Cabinet. As the Prime Minister has said, in our system, the Minister sets the pace, not the civil service. Does the Minister have a secure job? Very, very far from it. As a friend told me, I think there are better ways to make a living. This, in reality, is what the White Paper refers to when it talks of risks. The Minister has a most insecure job. Besides his performance at the job, he has become literally public property with respect to the conduct of his personal life, and this also includes his nuclear and extended family.

On the part of "public responsibilities of a political career", no other CEO's major decision is more transparent or more debated than that of a Minister. The Minister for National Development's policy on flat allocation as compared to that of the CEO of a real estate (even public-listed) company. The Minister for Health's hospital charges compared to that of the CEO of a private hospital or even a conglomerate. The COE policy of the Minister for Communications wins the challenge trophy in this respect! This is the meaning of "public responsibility" as compared to the decision-making responsibility of a CEO of a private or even a public-listed company. This is not to make a triviality of the importance of one against the other, but just to amplify on the meaning of the phrase "public responsibility of a political career".

On an even more sombre note, the failure of a political career as a Minister is even more fatal. This could be a loss at the polls (for a myriad of reasons) or a failure to have lived up to his expectations, or other personal failures. There is even less room for manoeuvre or readjustment. How will he re-shape his life? Has anyone any answers? This must be a lonely, difficult, narrow and steep hill to climb. I have no answer. This is the ultimate risk to bear. This is why the Prime Minister has said that civil servants may accept, but their wives object. It is my belief that as the public becomes more aware of these realities, the empathy will develop, and the issue of benchmarking them becomes easier.

To me, the job of a Minister is unique, and the demands on a Minister are also unique. There is no equivalent private sector comparison of the scope of the job, or the equivalent responsibility. Our whole nation's destiny is in the hands of these few to whom we have entrusted the affairs of state. Let us pause and reflect. The Government is responsible for building an infrastructure so that economic growth, social and cultural development, and ultimately a better life for all will be the result. Many nations and cities have faced the growing pains of an inadequate infrastructure. Others are unable to move into the next phase of development because of improper planning. The end result is a poorer standard of living for everyone. Is there a price that we can place for having this infrastructure? The Prime Minister has mentioned the cost of $17 million for the Cabinet. This is a mere cost of one secondary school.

To me, as long as there is a commitment to appoint the ablest and the best on the one hand, and there is no reason to doubt this, and there is a commitment by those appointed to serve selflessly for the common good on the other, and we have a track record of this, paying our Ministers better as laid out in the White Paper is easy to endorse. However, the people will be dissatisfied if their trust is misplaced.

Mr Deputy Speaker, Sir, I support the motion.