EXEMPTED BUSINESS

Resolved,

That the proceedings on the item on the Order Paper today be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Mr Wong Kan Seng].

Mr Peh Chin Hua (Jalan Besar GRC): ( In Mandarin): Mr Speaker, Sir, I support the White Paper issued by the Prime Minister's Office on "Competitive Salaries for Competent and Honest Government" which sets a benchmark for the Ministers' salaries based on two-thirds of the average of the principal earned income of the top executives in the private sector and a benchmark for top civil servants based on the average of the principal earned income of the 15th person aged 32 years old belonging to the six professions.

I feel that the caption used by Lianhe Zaobao for the report on the White Paper, gao xin yang xian, gao lu yang lian, [ ] is very meaningful. It means "high salaries to keep the able and good remuneration to keep the honest". These eight Chinese characters have effectively reflected the whole implication of the White Paper.

For more than 30 years, our clean, honest and effective Government and a very sound civil service system has transformed Singapore from a country with no natural resources into a strong economy whose national income is second only to Japan, in Asia. Our honest and clean Government is one of the main political factors that contributed to this success. If we do not have an honest and clean government, I believe the standard of living in Singapore and our economic development would have remained in the poverty state as in the 1960s or the 1970s. Since our clean and honest Government is the main factor for our political and economic success, we should maintain this so that we could step into another era to create another political and economic miracle. This is to ensure that this small nation of Singapore will continue to be successful.

Mr Speaker, Sir, good remuneration to keep the honest may sound like a somewhat profound philosophy. But it is a very fundamental principle which is well understood by everyone. It is only with good remuneration that we will be able to attract the best talents from our modern society to take up Ministerial posts and top civil service posts. In Singapore, where the population is only three million, the search for talents is extremely difficult. If we are unable to get the best people to become Ministers and top civil servants, and if we lose these top talents to the private sector, then the progress of our nation will stagnate, even retrogress, and the future of our people will certainly be affected. Therefore, by selecting this transparent and responsible formula to adjust the salaries of our Ministers, and not giving them low salaries, as in other countries, and then package them with lots of invisible perks and extra benefits, our method is more sensible. This is another manifestation of honesty to the voters, by a responsible Government.

At the same time, this White Paper would give our people ample opportunity to study and analyse the whole exercise, in a calm and rational manner. In fact, considering the capability of our present team of Ministers, if they were to resign and become Chief Executive Officers of multi-national companies, I am sure they would be more than competent to handle the job. In fact, it would be like putting fine timber to petty use. Therefore, by setting the benchmark of the Ministers' salaries based on the average of the principal earned income of the top four individuals from the six professions, it is very fair. Moreover, do not forget that they are going to receive only two-thirds of the average income. During the debate, many MPs neglected the fact that the Ministers are going to get only two-thirds of the average income of the top executives in the private sector, and not the full amount. On top of that, it would take three years for them to reach this benchmark. This reflects the fact that when a Minister takes up public office to serve the people, he has even to make some financial sacrifice. This is one of the good points of the White Paper. It is not like what MP Low Thia Khiang said just now, that the salaries of our Ministers are so high and so much. He gave people the impression that only fresh air is free in Singapore, and we have to pay for everything else. I do not disagree with this view of his. But when Mr Low runs his Hougang Town Council, he does not say that his residents do not have to pay their conservancy charges. They are also charging for their services. How is he going to explain this?

I feel that the expression, in Chinese, used by Mr Low Thia Khiang in his speech was a bit too strong. He said that we are using "people who take money for their father" to rule the country. I think it is very unfair to use such an expression to describe our Ministers. It is very unkind. I was thinking if, one day, Mr Low Thia Khiang becomes the Prime Minister, what would his Cabinet Ministers think about it? Of course, I realize that he has another motive which he did not say aloud, that is, if the PAP Ministers are too good, then the Opposition parties would have no chance to come into Parliament as the ruling party.

The White Paper has clearly stated that the upward adjustment of the Ministers' salaries is not the sole factor that motivates people to become Ministers. The personal sacrifice that a Minister has to make when he enters politics is still inevitable. However, if the financial losses that a Minister has to suffer is much too great, then they will certainly deter the capable young Singaporeans from joining politics. Today, the days of anti-colonialism and fighting for independence are already over. Singapore is now moving towards the standard of a developed country. We are not facing any serious crisis. The younger Singaporeans would rather go for more challenging, satisfying and high-remuneration jobs in the private sector than to become Ministers and risk being scolded by people day in and day out for the policies they implement from time to time. Therefore, if we do not increase the salaries of the Ministers and the top civil servants, then it will be hard to persuade younger Singaporeans to take up a political career with so much public responsibility.

Mr Speaker, Sir, I come from the private sector. Before I joined politics, I had been in the business world for more than 20 years. During the last few months, I used to sit alone in my garden, in the middle of the night, pondering over all the work that I have done over the years and comparing the work in my own enterprises with my political work, I feel that it is still more challenging and more satisfying to be involved in my business endeavours than in politics. I can tell you this feeling comes from the bottom of my heart. If we are unable to correct this deviation, then, in future, it will be very difficult for us to retain the very good young talents in our Government.

On top of that, the functions and decisions of the Ministers have a great impact and influence on our society and our people, much larger than the influence by the CEOs of private enterprises. Those who are trying to compare the responsibility of the CEOs of multi-national companies or private enterprises to that of our Ministers, are like pitting a secondary school student against a state representative in a weight-lifting competition, and asking them to lift the same weights - the difference is too great! They are making the mistake of "not seeing the wood for the trees".

Mr Speaker, Sir, I am very happy to note that Mr Chiam See Tong had said yesterday that he agreed that we should not pay our Ministers too low a salary. Although he said that the Ministers' salaries should not be compared to that of the private sector, he indicated that the Ministers' pay should be based on a certain life-style. He suggested that the Minister's monthly salary should be S$51,000. I made a calculation, with S$51,000 per month plus three months' bonus, that is to say, Mr Chiam is suggesting that the Ministers should be paid a total of $765,000 a year, which is quite close to the $800,000 recommended by the White Paper. I still think Mr Chiam See Tong is a more rational, reasonable and realistic Member of the Opposition.

Mr Chiam See Tong: Sir, would the Member for Jalan Besar GRC allow me to clarify?

Mr Speaker: Mr Peh, are you giving way?

Mr Peh Chin Hua: ( In Mandarin): No, Sir. Every time when I went to the third world countries to do business, I discovered that corruption was very prevalent among their political leaders and senior civil servants. The reason is that in their country, they do not practise "good remuneration to keep the honest", and the talented people in their countries are not given fair and good treatment. Therefore, some of their political leaders abuse their powers to attain personal gains, resulting in a very serious state of corruption in their countries. Eventually, the people will put the blame on these leaders, condemn them, call them "a disgrace to the country", "scums of the community", etc. But all these criticisms are not going to help their countries.

We cannot expect the horse to run well if we do not feed it well. If the horse is not properly fed, then it could not even stand properly. How could you expect the horse to run well? In the end, you whip the horse and you torture it. It is just an act of cruelty. That is all.

Mr Low Thia Khiang said that he was shocked about this White Paper. I do not know why he was shocked. But I believe that he must be shocked that this White Paper has made it very difficult for the Opposition to win elections and become the ruling party. This is a fact. Mr Low Thia Khiang wants the horse to run well and, at the same time, not to eat too much hay. He even wants the horse to keep on running all the time. I believe this does not stand to reason. He feels that the Government is practising the "politics of envy" and wants high salaries for the Ministers when it sees that the top executives in the private sector are getting high salaries. On the contrary, I feel that it is Mr Low who is embracing the "politics of envy".

I often say that if we are jealous of the success of another person and jealous because his salary is higher than yours, then it is just an illustration that you are useless. I hope that Mr Low would ponder over this theory.

Why is it that so many people do not went to come forward and join politics? Many Members have spoken on this subject. Let me quote what the Member for Eunos GRC, Mr Charles Chong, said yesterday. He said that there seemed to be more and more people applying to become Nominated MPs, yet the Government is finding it more and more difficult to attract talented people to join politics. It is a fact. He said that since the salary of a Nominated MP is lower than that of an Elected MP, it can be said that these people who come into Parliament to serve as Nominated MPs have a sense of dedication. This is also true. Therefore, he suggested that the Nominated MPs should be allowed to formally enter politics to have a taste of the challenge and satisfaction of participating in the process of policy-making. Personally, I am very much in favour of it. It is a very good suggestion. I hope that the very good Nominated MPs would come forward and join the PAP to contest the General Election.

Many of my Parliamentary colleagues and I are very envious of the job of the Nominated MP. All they have to do is to come to Parliament and make one or two speeches in a month. They do not have to face their own voters. They do not have to spend late nights meeting the people. They do not have to go door to door visits on Sundays and they do not have to take part in constituency activities. They do not have to look after town councils and they do not have to attend meetings of the various committees in the Government during office hours. It is really working us to death!

On top of that, the reporters of a certain newspaper seem to favour the Nominated MPs, giving the people the wrong impression that the work performance of NMPs is more outstanding than the Elected MPs. I do not disagree with the fact that the NMPs have done well, but this sort of favouritism for the NMPs has resulted in more and more people wanting to be NMPs. This is one of the main reasons. So if this goes on, it is certain that the number of people applying to become Nominated MPs will keep on increasing. The Government will find it more and more difficult to attract talented young people to join politics. This is not surprising!

I believe the reason why my Parliamentary colleagues and I are envious of the NMPs is that the stress on their job, the political risks and responsibility to the public are entirely different from the Elected MPs.

During these two days' debate in Parliament, most of our MPs agree with the principle to increase the pay for our Ministers and top civil servants. This is very encouraging. Sir, today our country is wealthy. We have good reserves and our economy has been growing well every year. Since we all want the horse to run well, then we should give the horse more hay to eat. Only the horse which has enough hay to eat can run well.

Mr Speaker, Sir, I realise that the Elected MPs are facing more pressure than the Nominated MPs, and of course, the Ministers face much more pressure than the MPs. Take for example, the COE. Although the COE is a very good long term policy, I am quite sure that, in recent months, Minister Mah Bow Tan must have been having many sleepless nights. Because of our young people wanting to upgrade to bigger HDB flats, and the supply being unable to meet their demands, resulting in the applicants having to wait for two to three years, I believe our Acting Minister Lim Hng Kiang must be having HDB flats in his dreams every night. This type of work pressure is not easy to endure! That is why many people do not want to become Ministers. They do not want to be Members of Parliament, but they want to be Nominated MPs and they want to work in the private sector.

Let me quote another example, the former Minister for Defence, Dr Yeo Ning Hong. Before he stepped down, we could see that he had a lot of white hair. Soon after he stepped down as Minister, in a matter of just a few months, I discover that his hair is turning from white to black again. If you have not spent a lot of time with him, you will not believe what I have said is true. He did not dye his hair. It is because he is not facing so much stress now. He is more relaxed. Although he has to look after two statutory boards, he does not have to face so much pressure as a Minister. So all these examples that I have quoted show that the contributions by the Minister are actually much more than what they have been paid. Some people believe that the Ministers do not have to pay income tax for their salaries and some people say that Ministers do not need a COE to buy a new car. Some even say that Ministers enjoy free parking. These are all wrong impressions and they are very unfair to the Ministers. So, Mr Speaker, Sir, may I suggest that apart from increasing the salaries of the Ministers, there is one other matter we may have to consider, that is, we should not work our Ministers to death. Otherwise, no matter how high a salary we may offer, we would not be able to attract talented people to become Ministers.

It is the same sentence that I want to say again. If you want the horse to run well, you feed it with more hay. But, do not insist that the horse run and run without stopping, otherwise it will die!

Sir, I fully support the motion. 3.55 pm

Mr Stephen Lee Ching Yen (Nominated Member): Mr Speaker, Sir, as I listened to the Prime Minister's opening remark yesterday, I find myself in agreement with the principle he pronounced. I agree with the principle that Ministers and senior public officers must be paid comparative wages, vis-a-vis the private sector. It is laudable that our Government has chosen to deal with this thorny issue in this open and transparent manner. I support the linkage of Ministers' and senior civil servants' pay with that of the private sector. This is a realistic approach.

Singapore is a small country with high mobility. It is a very real alternative for our high level officials to cross over to the private sector. Therefore, comparison with the private sector is realistic. But to do this, Singaporeans must be convinced that such high level salaries are fully justified.

Let me now turn to the benchmark for Staff Grade I. The White Paper suggested benchmarking the Staff Grade I against the average of 24 individuals in six professions. I feel that this benchmark is: (1) a bit on the high side, and (2) that the sample of 24 is too small and, therefore, can be biased by a few individuals. Because the White Paper is benchmarking against the best performing 24 individuals for any one year, large bonuses or significant stock options may skew the group average. Depending on the turnover of the 24 individuals from year to year, the group average can err on the high side. This point has been adequately covered by previous speakers.

In setting the Ministers' benchmark, we have the choice of benchmarking against a smaller but more selected sample of 24, and we take a one-third discount. Or we have the choice of taking a larger group, say, eight to 10 from each of the six professions, and have a smaller or no discount. I think there is a case to enlarge the sample size for reasons of stability, less turnover within the sample and increase accuracy.

Let me now turn to the benchmark for Superscale G. I have more concerns here. It is arguable whether a good Administrative Officer will easily rank among the top 15 in his cohort in terms of ability. What is more important, I think, is whether the Superscale G officer's job has the same level of responsibility and authority compared to those in the cohort in the private sector. What are the jobs in the private sector that these 30-34 years old hold? Are we looking at CEOs or divisional managers as well as partners in accounting and law firms? Are their income closely related to their performance? Are we comparing like with like? Should we not be looking at the duties and responsibilities of Superscale G and compare them with jobs of similar duties and responsibilities in the private sector? I suggest that we look into the job content of the Superscale G officer's job and do a private sector comparison. This is considerably easier to do for Superscale G rather than for Ministers. This would be more convincing than simply linking it by age alone. I do not know of any private sector job, no matter how stringent the entry requirements are, that will guarantee the job holder to be paid among the top of his age cohort.

Let me now turn to the impact on the private sector. Among the CEOs that I have met over the past 10 days or so, their concerns seem to centre more on benchmarking Superscale G, more so than the Ministers. This is due to, firstly, the much larger number of officers in Superscale G and up and, secondly, the subsequent adjustment of the levels below Superscale G. This may have its impact on the private sector which may want to keep wage relativity. For one thing, this will up the barrier price for senior public officers to move to the private sector. But this price increase may not necessarily slow down the movement, which is more a function of increased demand due to a buoyant economy, regionalisation coupled with a limited supply pool. For as long as the economy stays buoyant, the private sector will continue to pay to hire. The public sector will find itself falling behind in pay, especially with the two-year time gap on IRAS returns. The public sector will then respond with a hefty adjustment, and then it starts all over gain. The private sector works on a much shorter time frame than the public sector but wages, once up, are very difficult to bring down. We do not want to get into the situation of the blind leading the blind and collectively we become less competitive.

The White Paper was not explicit on how the benchmark would work. But through yesterday's discussion, I get the feeling that the 15P32 benchmark will be followed quite closely on an annual basis. If this is the case, I must caution against a rigid index. The CEOs' reaction to the Ministers' pay is, however, quite different. They are less concerned about the impact on the private sector, primarily due to the small number of Ministers involved. But they were more interested to guess who were in the top four. There are a number of unhappy bankers out there. I have yet to talk to the 32-years age group. The major complaint from the private sector, I think, stems from its inability to reconcile the risk/reward formula between the private and the public sectors. The criticism, put plainly, is that the public sector wants to match private sector pay but with considerably less risk. Some Members here may not agree with this perception but the feeling is strong among the private sector. Calibre and academic excellence by themselves are not sufficient to guarantee success in the private sector. Rather, qualities like resourcefulness, tenacity, the ability to size up business opportunities and act quickly, together with an element of luck, are often more important in commercial success. The climb up the corporate ladder is often seen as a slippery and treacherous one. Even after reaching the top position, a CEO can, through no obvious fault of his own, find the table turned against him through a boardroom battle, or a hostile takeover. Such risks do not exist in the public sector.

Over a dinner conversation a few days ago, a private sector CEO reminded me of the 1985 recession. By conventional private sector wisdom, when a company plunges from relatively healthy results one year to negative growth the next year, heads will roll. But this did not happen in the public sector in 1985. Having been personally involved in the aftermath of negotiating wage freeze and severe wage restraint, I disagreed with my CEO friend quite strongly that heads should roll in the public sector. I think this would be a minus imposition of private sector practice on to the public sector.

We were in the most serious economic crisis in 1985. Workers were losing their jobs and for the first time in a long time, we had an actual unemployment problem. If we were to sack all our Economic Ministers at that time, are there any from the private sector to replace them? I think we would be very hard pressed. There were very, very few, if any, in the private sector who have the understanding and a good grasp of the macro economic issues we were faced at that time. We had no time. We had to act decisively, and with the strong leadership and collective effort, Singapore was able to pull out of the recession in a relatively short two years.

The main point that struck me here is the key question. Are the two sectors so comparable and interchangeable that we feel comfortable enough to index the pay of one to the other? The public sector works on a longer time-frame and with different objectives than the private sector. The public sector is not subject to nor should it be subject to the pressure of short-term reviews by shareholders, as in the private sector.

Yesterday, Mr Bernard Chen spoke on the accountability of the public sector versus the private sector. I agree that the public sector accountability can be improved. But I am afraid that it can never come close to that of the private sector because the two sectors are structured differently and have different objectives. We must recognise these basic differences between the two, yet comparison between the two is inevitable. Therefore, in setting linkage between the two sectors, it must be done with a fair bit of flexibility and at a more modest and convincing level. I support the linkage with the private sector but I caution against the rigid indexing or a mechanical linkage, especially in the case of the 15P32. 4.04 pm

The Senior Minister (Mr Lee Kuan Yew): Mr Speaker, Sir, my generation of political leaders have become dinosaurs, an extinct breed of men who went into politics because of the passion of their convictions. The problem now is a simple one: How to select younger leaders when the conditions that had motivated the Old Guards to sacrifice promising prospects of a good life for a political cause no longer obtain in a completely different social climate? This change in climate is inevitable with economic progress and a change in social values.

In the 1960s and 1970s, as prime minister, I responded to this problem by a gradual increase in pay to reduce the big gap with the private sector. But in the 1980s, it no longer worked. So in 1984, I decided to target Ministers' salaries at 80% of their private sector counterparts.

Before I go on, perhaps I should take the point made by Stephen Lee. Are they comparable? Men for specific jobs are comparable, and the higher you go up, whether it is in the profession, whether it is in the corporate world, whether it is in politics, you are looking for these qualities. I have spent 40 years trying to select men for big jobs - Ministers, civil servants, statutory boards' Chairmen. So I have gone through many systems, spoken to many CEOs, how did they select.

Finally, I decided that Shell had the best system of them all, and the Government switched from 40 attributes to three, which they call "helicopter quality", which they have implemented, and they are able to judge their executives worldwide, and grade them for helicopter quality.

What are they? Powers of analysis: Logical grasp of the facts, concentration on the basic points, extracting the principles. You score high marks in Mathematics, you've got it. But that is not enough. There are brilliant mathematicians, but they make poor executives. They must have a sense of reality of what is possible. But if you are just realistic, you become pedestrian, plebeian, you will fail. And therefore you must be able to soar above the reality and say, "This is also possible." - a sense of imagination.

Then Shell has evolved certain other attributes - leadership and dynamism - a natural ability that drives a person on and drives the people around him to make the effort. The two psychologists who worked this out are Prof. Muller, a Dutchman, and van Lennep, I met, because I was interested some 15 years ago. And these qualities are really inborn. You can develop knowledge but if you have not got them, you have not got them, including the ability to be a good interviewer. Have you got that capacity to see through a person, listen to his voice, hear what his words are saying but look him in the eye, watch his face muscle and you know that he is actually thinking the opposite. A good interviewer does that.

So the first premise that I work with is that, yes, they are interchangeable. But you must interchange them at an age when they are still flexible because the older you grow, the more set you are in your ways, then the less able you are to take on a new career.

I had to choose men from all sources, and it was an extremely difficult job as the economy took off. In actual practice, my formula of 80% did not work because income tax returns came for last year. By the time the Finance Ministry and the Public Services Division had adjusted them and worked it out into the salary scales and made sure that everybody's relativity was worked out, there were another one or two years and so we were two to three years late. By which time, because we went through a buoyant period, private sector went on another 20-30%. Under the new system, the only lag will be because the income tax returns are late and analysis and review will only take another year. So it is two years behind time.

I do not want to cover what the Prime Minister has done about other systems. But I will bear witness that they are not working and that these countries, including the United States and the United Kingdom, would do better if they face up to their problems and adjust their systems. One corporate chief who was head of a think tank, some 15 years ago, passed a scathing judgement on British Cabinet Ministers, that of the 20-odd Cabinet Ministers, he doubted if three would be CEOs of British corporations. Who is responsible for that? They are. They created a climate of opinion where so much hypocrisy exists and the public believe, yes, it is glory. Therefore, you do your job for the country. You end up with what they now call "sleaze".

I spent a few days flipping through the English Sunday newspapers and they are just full of it. Contact man. You want to meet the minister. Pay me �40,000 a year as a retainer, I will arrange a dinner. But it is common place in Britain, where it never was. It only used to be the Americans who did that. But hypocrisy has led to the same position. Then you know, the memoirs that people have written. Bob Hawke writes a highly controversial, colourful piece, but of course it is not in the same class as Margaret Thatcher when it comes to pounds. Harper Collins paid her �2 1/2 million. That is an American publisher. And the London Sunday Times paid her just for serial rights a few million pounds.

For the past four years since I stepped down as Prime Minister, I have been studying the external economy and Singapore's place. Prime Minister wanted me to brainstorm and look ahead. I came to the conclusion that unless there was a major upset in peace and stability, which is not very likely for the next 10 years and probably for the next 15 and maybe even 20 years for this generation, this region is going to boom because it is taking off. It started off with the Korean War in the 1950s when the United States built up Japan. Then the Vietnam War, the United States had to source their supplies from South East Asia. From Japan, the industrialisation went to Korea, to Taiwan, to Hong Kong, to Singapore. The Plaza Agreement in 1985 pushed up the yen so the Japanese had to relocate their industries at the lower end. Then the Americans put pressure on the Koreans and on the Taiwanese and on us and pushed our currency up. So we in turn had to relocate and now there is a web of cross investments right across the Pacific, the western end. And unless we are fools and start going to war with each other, we are all going to boom.

I have just come back from a visit to China. I will give three examples of how we are losing good officers. These are anecdotal but it brings home to me in personal examples the changed circumstances.

Our trade representative in Shanghai is Mr Koh Kim Huat. After three years, he was doing very well because he represented Singapore. They like to link up with Singapore. He got to know everybody and he has a good network of relationships with all the leading officials of Shanghai. But he did not wait to be promoted. When his term ended, he was head-hunted by a leading Chinese Thai entrepreneur in the CP group and he is paid several times more.

This time, I went to Shenyang on 8th October, I met our former trade representative in Beijing, Lee Ying Chuen. From 1986 to 1988, he was our trade representative in Beijing and then he went back to TDB. But this time, he was well dressed up, double-breasted, he represented WBL. I asked him, "What's that?" Wearnes Brothers Ltd. They have built a "Summer Palace" in Shenyang and they have arranged with the governor that I should visit it. It is a super Big Splash, labelled Summer Palace. It is something better than our Big Splash and something less than what you have read about in Tokyo, a seaside in the centre of Tokyo - US$15 million, and several other investments. He now travels in executive style. I said, "Are you staying here?" He laughed, he smiled, and he said, "I come here one week a month." And he has time for other duties. It is a cosier lifestyle, more rewarding than what the TDB can offer him.

Then the Keppel team in Suzhou. They need somebody to lead their team to match and mesh in with the Chinese counterparts. We had to look for a good officer to head the Chinese Development Assistance Council (CDAC), Chan Soo Sen. Now, he has packed up and he is with Keppel-Straits Steamship leading their team. His knowledge of Chinese and his administrative experience, his knowledge of how the government works makes him the ideal man to liaise both with our government team and the Chinese team. And he has got to look for a deputy, because he does not want to live there all the time. So Mr Chew Whye of the National Productivity Board has also been lost and he is now Deputy in the Singapore Suzhou Township Development Consortium (SSTD).

The Chinese-educated have now come into their own. They were both from Catholic High School. I am told the whole cohort now is moving in.

When I was in Tianjin, I knew the Singapore executives were working in Tianjin for about two years already with Motorola. Motorola took them to deal with the staff in Tianjin. They know Motorola's culture. They know what has to be done. They speak Chinese. They get on.

And so it goes on. The numbers will grow, because French, Germans, Americans will head-hunt and they are doing this in Hong Kong and Taiwan and they are going to China.

In each case, the scope and nature of their work and their total pay and their prospects are totally different. Yes, there could be war, there could be disasters and they would have lost the comfort and security of their government jobs in Singapore and their pensions. What are the odds? One in 10? Even if it were two in 10, if I were a young man, I would take it. Staying here in the government service with the salary scales stucked below Ministers, to Permanent Secretaries, to Judges, etc, etc, me down Grade G, climbing up, why? If we do not do something immediately, the public service will be depleted of talent and this head-hunting for trustworthy and capable men working in government will not stop. They know that the government chooses carefully, that we indoctrinate them on good practices. So today, Indonesian corporations come here looking for executives, they want Singaporeans, more than any other manager - capable, honest, dependable.

In this situation, you have to adjust. Even more troubling is finding successors to Ministers. I just look around this House and I read Dr Ow Chin Hock about Feedback Unit. I wonder how the Feedback Unit would react if I told them of the changed circumstances. I never believed Dr Ow Chin Hock would, what the Chinese call, xia hai ( ), enter the ocean. Would you look at Dr Ow Chin Hock and believe that he was the swashbuckling type? He is as cautious, as circumspect, as you can find any academic. And I had expected him to spend the rest of his life teaching Economics in the National University of Singapore, but no longer, and I wish him well, after 20 years of lost opportunities teaching Economics. He is now with Pan United Corporation, travelling frequently to China, and I hope he will not travel less in style than Mr Lee Ying Chuen of WBL.

The MP for Bukit Batok, I knew him first as a lecturer in the Singapore Command and Staff College, Military History Branch. Then he became Parliamentary Secretary. Now he is the Deputy Group Managing Director of QAF. Mr Lew Syn Pau left NTUC Comfort. He is now Deputy General Manager, Banque Indosuez. Dr John Chen in NTUC has had many attractive offers. But I am glad to say that he has decided to stay with the NTUC. However, he has also taken on additional work and the NTUC had to agree because otherwise his experience will be more limited and therefore his future options will be more limited too. So he is now honorary economic adviser to the Governor of Szechuan, which I am sure will be a very broadening experience.

Mr Chng Hee Kok, you have all read, has been appointed Chief Executive Officer of Yeo Hiap Seng Ltd. Mr Peter Sung, former Minister of State, is Group Chairman and CEO of Tuan Sing Holdings. Dr Ker Sin Tze, promised to serve two years, served two and a half years, and has gone back to be Chairman, Superior Metal Printing Pte Ltd, and I am quite sure he is not worse off for it. Mr Eugene Yap, former Senior Parliamentary Secretary, is Chairman, Abacus Corporation. I also met Mr Chay Wai Chuen this time in Dalian. I asked him, "What are you doing here?" He is a consultant and he has matched an Arab group from the Gulf with watchmakers. Is it Anshan?

Mr Chay Wai Chuen (Brickworks GRC): Dandong.

Mr Lee Kuan Yew: Dandong which is Liaoning province and they make watches, but not of good quality. But between the capital of the Arab entrepreneurs and the labour force and experience of Dandong, which is the biggest watch factory, I am told, in north-east China, and plus probably Japanese or some high-grade technology, one day I may be presented with a Dandong watch!

And I think it is to be encouraged because this was the way Singapore grew, not by becoming careerist climbing up the snakes and ladders. Our forefathers took chances, seized their chances and modern Singapore is the result.

I must not forget Dr Tan Cheng Bock. He was only a doctor when I first knew him. Now he is a shipping specialist - Chuan Hup Holdings. He knows a lot about shipping now, and as it should be. Dr Tony Tan, as you know, is back in OCBC as Chairman, no place higher in OCBC, but he has made it.

The MPs who used to work in Government, Mr Chew Heng Ching is now an executive of HP Media Holdings Pte Ltd. I do not know what that is but it sounds impressive. Mr Leong Horn Kee of Orchard Parade Holdings, and I know what that one is because I have seen it in the newspapers.

Let me explain very simply, Mr Speaker, that MPs are real men and women, just like you and me, with real families who have real aspirations in life. So when we talk of all these high-falutin, noble, lofty causes, remember at the end of the day, very few people become priests.

The Catholic priesthood is shrinking. And we are now talking in a consumer age of finding a solution to produce people of comparable quality but without their total sacrifice. So you know the argument about whether a priest should be allowed to marry or not allowed to marry. The Catholic church has refused to compromise and they are still finding it difficult to recruit.

These MPs have all acted rationally. Options are there. They have decided on the sensible option. And all those in the higher brackets of the educational ladder today have broadened their options. This is another problem which the Government has got to face, because our income gap or opportunity gaps between the people at the top and the people at the lower end will widen. You need highly-trained, high-quality men to go abroad with you. Nobody wants your semi-skilled worker. That is what they have. Nobody even wants your skilled worker. They may want your supervisor. Because they have skilled workers too, or half-skilled, who want to do the skilled job, and probably will, in a couple of years.

The corporate world in Singapore knows that PAP MPs have been carefully selected. A PAP MPship is like a Good Housekeeping seal, a hallmark of character and integrity that adds value to a person. I instituted the practice. If you look through the MP list, from 1955 onwards, you will find that in 1955 we had two barbers, two postmen, clerks, but they were unionists. They are not ordinary people. But with rising standards, every election term, I had to move with the higher educational level of the voters, something Mr Chiam learned rather late. So he discovered that he had to get graduates. I knew that. By 1968, I started moving in that direction.

This is a demanding electorate. Everybody strives to get up to the highest he can of the education ladder, and he wants somebody who is better than him to represent him. He does not want somebody he can talk down to. So PAP MPs are sought after.

Let me assure the House that the Government enforces strict rules to prevent influence peddling for the benefit of any person or company. But for that Singapore will be just another of the governments in the Third World which we are not. It is important that we remain different because that is an enormous economic capital for us. Lose that and we may lose about 30% of the rationale why we are different, and why we attract different kinds of investments. But I have had to recognise, and I have told the Prime Minister, that you cannot fight this. A powerful wave has swept up our young and some of our not so young. There is an eagerness, almost anxiety, that they will miss the escalator that is moving up and that can carry them to golden opportunities.

In fairness to the young, I would add this with almost a touch of nostalgia for older and better times. It has swept up part of the older generation too. Because the Old Guards, they do not just die away. In Hollywood movies, you walk into the sunset and music and clouds. But in real life, you live on, you become a little bit more infirm, you need medical treatment, and you have needs to meet. For example, Dr Goh Keng Swee recently resigned from the Board of the Government Investment Corporation in order to avoid conflict of interest situations with GIC when he advises several financial institutions on investments in Singapore and abroad which may also be of interest to GIC fund managers. That is quite a shift in the world. It is as if I suddenly decided that I will join Henry Kissinger Associates. The rewards are in for key personnel. It is six, seven figures. Or I do not even have to leave Singapore. I could go back to Lee & Lee. I started the firm.

Recently, another distinguished former Minister, Old Guard, part of my generation, was deputed by the retired MPs to see the Prime Minister who told me of this. He was deputed to request that the commuted part of their pensions should be restored after 12 1/2 years, as is the case with civil servants. It is not the case with Ministers and MPs. I know what the Old Guards feel. They have seen me. I said you know the rules of the game. You went in, these were the rules, these were the pensions. But they feel that they have been short-changed because their fixed pensions have deprived them of their share in Singapore's growing prosperity. So the Prime Minister has to consider the matter.

It is the same society, same Old Guards who sacrificed, some of them literally took their lives into their hands when they decided to stay with the PAP and not move over to the Barisan Sosialis in this House in 1961. But for several of them, the history of Singapore would be different and I would not be meeting and talking to you here. We may be in a completely different age and a different world.

Now, let me talk about the recruitment of Ministers. In the last 14 years, only four Ministers have been recruited from the private sector. Tony Tan from OCBC, Yeo Ning Hong from Beechams, Wong Kan Seng from Hewlett Packard and Yeo Cheow Tong from Le Blond. Indeed, the last two, Wong Kan Seng and Yeo Cheow Tong, were originally from the Government. Wong Kan Seng was in the Administrative Service and Yeo Cheow Tong was in EDB. All other Ministers have been recruited from the public sector, either the SAF or the public institutions. For the future, the position will be more difficult. I believe the Prime Minister will be very fortunate if he can find one out of five Ministers who will come from the private sector. He keeps on trying. He never gives up. He keeps on making friends, he keeps on inviting them to tea sessions. They keep on saying, "Next time, please, when my children are grown up." They could not afford to accept the offers he has made to them to become MPs and Ministers of State or Ministers.

Let me explain why it is important to have a mix of Ministers from different backgrounds in the Cabinet. I give my personal experience and example. Lim Kim San was and is a very practical man of business. He does not write speeches and books. Every time he has to make a speech, I know it is a tremendous effort and he tells me, "Must I make this speech?" I said, "Yes, you have to. This is your own constituency." But he has a lively practical mind. That is why SPH's profits have increased. He has gone in there, looked at the accounts, decided that the following changes would be made, costs would be cut, this would be amalgamated, and it has just jacked up profits, as I knew he would do.

We made him Chairman of HDB in 1960 when we formed HDB. It was crucial, life and death. If we failed we would not be re-elected. This was the first year of office of the PAP. There were a lot of zealous idealists who wanted to put theories into practice. One of them, a member of the PAP Central Executive Committee, said, "We must be different from other builders. Other builders hire contractors who exploit workers. We will hire the workers direct, cut out the middlemen, they will be paid more and we will be model employers." Ong Eng Guan ordered Lim Kim San to hire the construction workers direct. Lim Kim San was nonplussed. He came to see me in my office. He asked me a very simple question. He said, "Do you want me to build houses or do you want me to be an employer of construction workers?" He said, "If you want flats, then I know how flats are built. You leave it to me. I will produce you the flats. If you ask me to hire workers, better look for another chairman." He said, "Let me explain. Every contractor has an elaborate supervisory system. He has his relatives, he has his trusted kepalas. They in turn have each a gang and they know each person in that group and each person has got to produce results to deserve the pay. If I hire them all, including the kepalas, who do not know each other, you will be lucky if you get half a flat for where you will have the flat." So I said, "Proceed."

All these ties of kinship and personal obligations ensure success. So I overruled Ong Eng Guan and he built the flats. One block was in my constituency, opposite the former S.H.B. Union House, Cantonment Road. It is still there. If that had not gone up, I may not have been re-elected because Nanyang University and all the Chinese Middle School students targeted Tanjong Pagar to canvass against me. But they looked at the flat that was going up, they decided these little boys were not going to put up the flats, I was. That is why I came back to this House.

Later, I persuaded him to take part in the 1963 General Elections and I made him Minister for National Development. On several occasions, his practical market approach to problem, made a difference to the success of projects. So it is important for the Prime Minister to find younger generation Lim Kim Sans, people with different backgrounds who will sit down, cross-fertilise ideas, improve and sometimes block a plan which is theoretically marvellous but will not work out in practice. It has a leavening effect. You need people with different backgrounds.

If we keep to past practices, suppose we make no change, we just keep on tampering with the system, and every few years we come back here and have another long debate. I had them every three, four, five years, since 1972. Individuals in Singapore and corporate entities will flourish but Singapore will be depleted at its heart, at the core. Without this functioning core, you will not have your opportunities. The Prime Minister is already 53, the Deputy Prime Minister is 43. This team will not last two election terms without considerable infusions of fresh blood. Three Ministers have got two Ministries each, and the Ministers need 15 MOSs as backups, and they have not got it. They've only got seven. They need to be recruited in order that they learn on the job and become part of the team.

If our solution, and I believe this one is a realistic solution and a sound one, works, in five to 10 years, the World Bank will again give us a citation, as they did this year. Let me read what they said:

`Not surprisingly, Singapore, which is widely perceived to have the region's most competent and upright bureaucracy, pays its bureaucrats best.'

When they use the word "bureaucracy", these are Americans, they mean Ministers too. They went on to say:

`The monthly base salary of a full minister in Singapore ranges from US$13,800 to US$17,300, while a minister of state receives the equivalent of US$5,600 to US$7,600.'

They are saying, yes, it works.

I am pitting my judgement, after 40 years in politics, and I have been in this Chamber since 1955, against all the arguments on the other side. I said this is necessary for Singapore. I say face up to the facts, get a good generation in, get the best of this generation. When it works, the World Bank will cite us again. You do not get cited because you are conventional, you follow other people. You become a model because you went against conventional wisdom and prove that they were wrong and you are right. And if we can keep honest, competent Government, never mind about its being brilliant, that is a tremendous achievement.

Look at all the countries around us. They started off self-sacrificing revolutionaries - Vietnam, China - they went on long marches, their friends died, their families perished, their systems are not corrupt, their children are corrupt. We have not gone that way because we are realistic and we know adjustments have to be made.

There is a price to be paid for hypocrisy. Ministers deal with billions of dollars in contracts. It is so easy. But when discovered, like Teh Cheang Wan, he preferred death because he lost everything. In this society, you will lose the respect of your friends and probably also your relatives. The fate of a country, when it is a matter of life and death, you throw up people who put personal considerations of safety and security and wealth aside. But that is when you have a revolutionary situation, when the whole people depend on the actions of a few. And I believe if such a situation recurs again, some Singaporeans will again emerge and rise to the occasion.

But let us look at the problem today. What is the burning issue that excites the population? The price of COEs has cleared $100,000. Horror all round. Amazing. Does everybody expect to get a COE and buy a car? I believe they do, and there is nothing wrong with it. What is there needed of the Government? Not heroic great schemes, but fine-tuning the traffic, get more underground tunnels, more parking spaces, underpasses, overpasses, expressways, flyovers, spaghetti junctions. In order what? To issue another few hundred or a few thousand COEs a year so that you can lower the price. But as the economy booms, when incomes are going up 6-8%, and COEs are increasing by 3%, I read all these clever little letters to the press of how it can be fixed. Stop double transfers, pay as you bid. How does that overcome a basic factor - incomes go up by 6-8%, demand goes up by 6-8%, supply goes up by 3%. All right, ALS - whole day. So it goes up by another 1/2% to 3 1/2%. Does that solve it? It can only be solved if we can make supply go up by 8%. But ingenious journalists and their editors in charge of the motoring page keep on writing fatuous pieces, taking up newspaper space. I am amazed. Highly intelligent people write complex mazes which show that they have not understood or refused to understand a simple equation of supply and demand.

You know the hopes that are placed now on Electronic Road Pricing (ERP). This is not a heroic task. It is fiddling with credit cards you put on your windscreen. At the end of it all, what? Instead of paying for the COE upfront, you pay for it every time you drive down Orchard Road at the wrong time of the day. That is all. So maybe more people own cars which they are polishing in front of their house because they cannot travel at the time they want to travel, because other people who can afford more and are prepared to pay the high price are going down Orchard Road and Bras Basah Road will pay. But if that is what makes people happy, I say why not?

So it is crucial when you have tranquil Singapore that you recognise that politics demands that extra of a person, a commitment to people and to ideals. You are not just doing a job. This is a vocation. Not unlike the priesthood, you must feel for people, you must want to change society and make lives better.

If I had not done that and got no satisfaction out of it, then I would have been a fool doing it because I could have gone back to Lee and Lee umpteen years ago and ridden the boom and sat back, probably at least as rich as my brother, or my two brothers - one is a doctor, another a lawyer. But why not? But somebody has to do this in order that they can prosper. And I am saying those who do this deserve not to be penalised or you will get nobody doing this.

One journalist told me that there was some public concern that these higher salaries would change, and I quote him, "the name of the game and attract a different type of person with different motivations". It is possible that politically and socially uncommitted people from the higher management and professional brackets will be attracted to the idea of public office for this higher pay. I doubt it. But if it is so, and they can do better than the present Ministers, they should come out and offer themselves as the alternative. That would be good for Singapore.

Far better to have a credible alternative to the PAP than the motley collection of lacklustre candidates put up by the Workers' Party, the SDP, the National Solidarity Party, the Singapore People's Party and so on and so on. None of them has ever assembled a team remotely credible as an alternative government. Yes, they have got Mr Low Thia Khiang. He is a good MP. He looks after his constituency. But you need more than a good MP. To be a movement, to be a government, you must produce 15 men with the capability to run the government. I am not sure that a good MP can run a ministry. And I am not passing derogatory remarks because being a teacher and being a public speaker, especially in Teochew, it is a useful attribute. The PAP had plenty of them and they were very useful for campaigning. But at the end of the day, you have got to sit down, look at the file, masses of figures and you zero in on the critical issues and said, no, don't do that, do this.

If this salary formula can draw out higher quality men into politics, whatever their motivations, I say, let us have them. It is better than the Opposition we now have. If we can get in opposition people of the calibre of the Nominated MPs, I say Singapore is better off. At least, I respect them. I can join in the argument.

The only one that I find worth listening to is Mr Low Thia Khiang. The others, I switch off. And I have asked the press. They say, yes, they also switch off. It is very difficult to put your earphones on. It is a sad commentary on the standard of Singapore opposition politics.

But at the heart of the question is: What makes a good government? That is the heart, the core of the question. Can you have a good government without good men in charge of government? American liberals believe, yes, you can. That you can have a good system of government with proper separation of powers between the Executive, the Legislature and the Judiciary, plus checks and balances between them, like the regular tussle between Congress and the White House and between the House of Representatives and the Senate in the US, and there will be good government even if weak or not so good men win elections and take charge. That is their belief.

My experience in Asia has led me to a different conclusion. To get good government, you must have good men in charge of government. What I have observed in the last 40 years is that even with a weak or poor system of government, but with good strong men in charge, you get passable government with decent progress. And, on the other hand, I have seen many ideal systems of government fail. Britain and France, between them, wrote up probably 80 constitutions for their different colonies. Nothing wrong with the constitutions, with the institutions, and the checks and balances. But the society did not have the men that could work those institutions, nor the men that respected those institutions. Because the esteem, the habits of obedience to a person because of his office, not because of the person, is something that takes generations to build into a people. But the leaders who inherited these constitutions were not equal to the job, and their countries failed and their systems collapsed in riots, in coups and in revolutions.

Every time I hear people criticising us. When we are successful, they say we are sterile. When you are not successful, they say, look at the slums, look at the degradation, look at the filth. These are the wiseacres. We have got to live with the consequences of our actions and we are responsible for our own people. And we take the right decisions for them.

You look at the old Philippines, the old Ceylon, the old East Pakistan and several others. And I have been to these countries and these places. When I went to Colombo for the first time in 1956, it was a better city than Singapore, because Singapore had three and a half years of Japanese occupation and Colombo was the HQ of Mountbatten's South-East Asia Command, and they had large sterling reserves. They had two universities. Before the war, a thick layer of educated talent. So if you believe what American and British liberals used to say, then it ought to have flourished, but it did not. One man one vote led to the domination of the majority Sinhalese over the minority Tamils who were the active and intelligent fellows who worked hard and got themselves penalised and English was out. They were educated in English. Sinhalese was in. They got quotas into universities and now they have become fanatical Tigers. And the country will never be put together again. Somebody should have told them, change the system, loosen up or break off.

Looking back, I think the Tunku was wise. I offered a loosening up of the system. He said, clean-cut, go your way. Had we stayed in, and I look at Colombo and Ceylon - Sri Lanka - changing names sometimes you deceive the gods but I do not think you are deceiving the people who live in them. This makes no big difference to the tragedy that is being enacted. They failed because they had weak or wrong leaders, like the Philippines.

Singapore must get some of its best in each year's crop of graduates. When I say "best", I do not mean just academic results. When we interview a candidate, his 'O' levels, his 'A' levels, his university degree will tell you his powers of analysis. That is only one-third of the helicopter quality. You've then got to assess him for his sense of reality, his imagination, his leadership qualities, his dynamism. But mostest of all, his character and his motivation. Because the smarter the fellow is, the more wrongly he is motivated, the more harm he will do society. But I also believe, from my experience, that Muller and van Lennep are right that at 21, the man is fully developed and you can discover what he is, if you can test him arduously enough. But by 25 to 30, it is obvious what he is.

You want men with good character, good minds, strong convictions. Without that, Singapore won't make it. The problem is: how do you do that when a booming economy is drawing them away? I do not think we can afford to be inhibited by conventional attitudes. Editors of our newspapers, when they were given copies of the White Paper, were surprised with the high earnings of the top men in the professions. My answer is, let us have these figures every year, independently verified -IRAS is not cooking them up. We know how much people are earning. Let us have them. Under oath of secrecy, a group of men independent of the Government and the IRAS can testify and verify.

But what is it we are arguing about? The Government today - Cabinet Ministers, Parliamentary Secretaries, Political Secretaries, everybody - costs $17 million a year. That is the cost. Working a GDP of nearly $90 billion, growing at 8%, which is $6 billion a year. You have wrong men here, it is a disaster. There is no way a Prime Minister can argue that any Minister can walk out of his Cabinet and get this kind of salary. Just as there was no way when I was a partner of a legal firm and we shared profits in a certain ratio, that any partner could walk out and get that share. In any team, like a football team, there are strikers who score the goals, but he needs his full-back, his wings, to feed the ball to him. And he has to decide how to deploy them.

And really we are arguing at the end of the day, whether by this formula which over 3-4 years will pay them $5 million more, the whole lot. What on earth are we arguing about? Except people get envious and they say, "They should really be sacrificing."

If it were possible to carry on with the system, I will be in favour of carrying on with what I have been familiar with. But I know it is not possible. I have explained to you on my recent journey how I met three persons and immediately the changed circumstances became obvious to me. And I came back reinforced in my belief that the Prime Minister has to move and move quickly.

Let me now take Members to a different angle to this problem. The PM is like the conductor of an orchestra. He has got to make great music. I think the best metaphor or simile for a Prime Minister is really a conductor. In other words, he has got to know something about each instrument, what sounds they make, where they come in. When I started my job, I didn't. But I had to learn it quickly. Home Affairs, Finance - you have to have stability, you have to have an economy going, you've got to have labour relations, education, national development, housing, the whole lot. You must know how to deploy your resources, not just money but manpower. So at any one time, a certain sector is the important one and I send my best Minister and my best Permanent Secretaries to support him, to make sure that that sector succeeds. And he has got to decide how he rewards them. He needs people in his team who are goal scorers. Any team to win must have sharp-shooters. In other words, in government, you must have ideas, you must create new concepts, build new institutions and be innovators, and not simply followers of orthodoxy.

I give you a few examples from the past. It is like blowing the trumpet of the Old Guards, but they are out of politics, maybe they deserve to have a few trumpets blown on their behalf. We had massive unemployment in 1959, more than 14%. Every year, 55,000-60,000 were born, 4% of our population growth. It was quite frightening, beyond the capability of Singapore to solve it. We knew industrialisation was the only way. Commerce could not solve it. The United Nations sent a team. Dr Winsemius was the leader. He recommended, "Yes, proceed."

Dr Goh discussed it with him, and I discussed with Dr Goh and met him and said, "Let's try. Economic Development Board (EDB) and sell Singapore to America, to Europe, to Japan, as a manufacturing centre." Nobody had an EDB in the world. We formed one and we put in our brightest and our best. You want to know why you got good jobs, why you are doing well. Because every year, I allowed Dr Goh to have his pick of our top scholars. Of course, you make mistakes. Some are bright but they are not much use, lacking judgment. But within a couple of years, you know who has got judgment, sense of reality, imagination, leadership, dynamism plus the powers of analysis. They served Singapore well. We innovated. He created that organisation and he also built up Jurong, invested hundreds of millions of dollars, built roads, canals, filled up the earth, put in power, put in water. And for five years, it was empty, capital lying fallow. We watched it, wringing our hands. Because two years in Malaysia, the Finance Minister of Malaysia squeezed us and did not give us pioneer certificates. We nearly failed. But we did not fail.

I gave Dr Goh the best Permanent Secretary we had - Hon Sui Sen - to help him. He became Chairman of EDB and he was a very good judge of people and persons. He was a very quiet man, didn't make great speeches, but understands people and knows who can do what. He built up a good team. And from EDB sprang Trade Development Board (TDB), sprang DBS, because we had to build up the finances to help people start their industries. This is not administration doing a job. This is entrepreneurship on a political stage, on a national scale. We changed the complexion of Singapore. You can bring him back to life and reward him?

In 1968, we were looking for ways to fill up our economy. Hon Sui Sen came to see me and said, "Let's take a chance. Change our foreign exchange regulations, release it." We were part of the sterling area. We had foreign exchange controls. He said, "Cancel it. Let's start the Asian Currency Unit. Collect all the dollars in the region, lend it to the world. We will be the link between New York closing and London opening." I listened intently. I said, "Proceed." We took the Bills through. Today, Singapore is the third largest foreign exchange trading centre in the world, next to New York and London. We have also got a budding futures trading exchange in Simex. We have great potential for growth and very high value added. Can you thank Hon Sui Sen?

True, it wasn't all his ideas. But he had the good sense to listen to people with ideas. So a Dutch banker called Van Oenen who worked for Bank of America, who was a friend of Winsemius, said, "Try it." But we made it work. Now everybody wants to be a financial centre. We have overseas HQ. Kuala Lumpur immediately followed. We have no patent on it. They studied our laws, they up the stakes. So we have to keep on, innovating, moving ahead. You do that with a bunch of mediocrities?

I make no apologies for collecting the most talented team I could find. Without them, none of you would be enjoying life today in Singapore, including the reporters up there. I say this without any compunction. Who pays for all this? A Singapore economy which has been so finely tuned that it is able to take advantage of every opportunity that comes our way.

You want to know entrepreneurship? Without Dr Goh Keng Swee there is no SAF. He is the SAF. 1965, we were suddenly independent. I said, "You were a corporal in the Singapore Volunteers. You know something about this. Better learn something more. Start it." He came back one day in February 1966, and he told me, "You know, we have got two battalions. They were in Malaysia for two years." More than half the battalions were now Malaysian Malays. So when one battalion came back from Sabah and the Malaysian Regiment refused to move out of their camp, they had to be put up at Farrer Park and they might have gone on riot or mutiny. So he came to see me and said, "You have made me as if I am a British general in charge of troops, half of whom are Italians." So we worked day and night to sort that out so that we have troops who are Singaporeans. Had we failed, I would not be here to tell you the story. We got the Israelis. We studied the Swiss. We got an SAF that nobody believes is just for show.

But the most important entrepreneurship is really the structuring of Singapore. I was determined that before the soldier fights for Singapore, he must have something to fight for. Each family must own their home. So I set out right from the word go against any opposition from any quarter to build up the CPF. At each salary increase, I pushed something into CPF and built up the home-ownership programme that today gives 91% to 92% who own their homes, which are going up in value year by year because the infrastructure is getting better, the economy is getting better and they are rising with it. So you can sell one 5-room flat in Singapore and buy two bungalows in Perth. But before you do that, remember that your 5-room flat will go up in price but your two bungalows there will be empty and will go down in price.

I take this as a matter of fact, but things have to be done which are unpleasant. I changed the acquisition laws and cleared off compensation for sea frontages so that we can reclaim the land. Then we have got East Coast Parkway. Fire sites, I reclaimed and acquired the right to acquire as of occupied status. It was Robin Hood, but I succeeded in giving everybody their own home. Of course, it is not me alone, but the concepts, the planning, I make no bones. I took responsibility, and it has succeeded.

I put Medisave in place. I faced opposition in the Cabinet. Ministers came back from China and said, "Wonderful place. Everybody has got the same medical services and for free." I said, "Why do you believe this fairy tale?" I put 4%, 5% aside. I changed the Minister and I put Mr Goh Chok Tong as Minister for Health. I said, "Implement this." Today we have a viable national health service which avoids waste, no buffet syndrome, but guarantees adequate support for everybody, adequate health.

The CPF also. Low interest rates, yes, but it has paid for all the infrastructure of our roads, bridges, airports, container ports, telecommunications, MRT, land reclamation. An ordinary group of people would think that up? No, Mr Chiam, you are wrong. You need entrepreneurs. I will say this, if we did not have the entrepreneurs, we would not be here and you would not be a lawyer, leading a quiet happy life.

Look at all the housing estates. Public housing in Singapore is not an apology for slums. You go to Britain, you go to America, and vandalism and crime. Have you ever asked why it is different? Because from my own experience, as I went around on constituency tours in 1962 and 1963, I discovered there were grassroots organisations, kompang groups, Muslim mutual fund groups, clan associations, retailers associations. I organised them and I made them community centres' management committees and they ran the place for themselves, for their communities. From them, I formed Citizens Consultative Committees and altered the face of Singapore. Then, as we moved into the housing estates, the same experience, I said, "Start zone committees, residents' committees, every five, 10 blocks." So there is a nervous system of human beings transmitting messages, getting people together so that they know they are a community and not just anonymous individuals who shut their flat doors and live their own private lives.

On my present contribution, this one I am going to be cautious, because the results will be another five to 10 years, but I think we are on the right track. If we do not go regional and sprout the second wing, our destiny will pass us by. Not everybody will be winning. But if we are careful, I think four out of five or eight out of ten will be winners, because the region will grow and we can grow with it. Civil servants work this out? No. You need somebody with the dare and the insight and say, "Look, this has to be done."

Of course, it is novel to have an industrial park in Suzhou and it may fail, but not if we are determined that it will not fail. When it succeeds, and the first signs can be seen in five years, although it may not be completed for 10, 15 years, then we have all the cities of China open to us.

I ask Mr Stephen Lee in private enterprise, supposing I was doing this as part of Kissinger Associates or Lee & Lee, what is my fee? You are going to begrudge $5 million extra to the Prime Minister who has got to look for new and younger Lim Kim Sans, Goh Keng Swees, Hon Sui Sens? He has got to find them, not every member of his team. But if he has not got such people in his team, he is in trouble. He will not be able to produce or deliver.

We will succeed in Suzhou. We will be able to do something, I cannot say of the same scale, but we will do something in Vietnam, either Hanoi or Ho Chi Minh City, just as we have done for Bangalore and for Batam.

I think I should allow the Prime Minister to blow the trumpet of his own team, but I have watched and I know they deserve to have their trumpets blown. If that IPO of Telecom had not had ministerial direction, we would have lost at least $2 billion in that first issue. Ministerial intervention and hard-headed minds, with very good grasp of figures, saw through all the complex data which our financial advisers gave us, and said, no, we will have this price. We will have it issued to the public of Singapore, maybe one million, maybe 1 1/2 million, and the strike price was eventually twice what the financial experts recommended. You give the Ministers 1% of that, the difference is $2 1/4 billion. Can you calculate that? Do you not think it is worth a few million dollars a year to make sure that the Prime Minister can recruit such people and he has to get them from the private sector too because, as I have explained, if they all come from the public sector, they all have the same background, you will not have this ferment which is very necessary.

Finally, let me put the issue very simply. I hope the Prime Minister also will not forget to mention about GST and HDB upgrading. You need boldness. Other cities go into decay and decline. But they have embarked on a plan, which I fully endorse, which will prevent the oldest estates from becoming slums. It is going to take more than a billion dollars each year which we are giving to our own citizens. They have to pay a small sum which is necessary because otherwise they will not understand the value of what is being given away. But we will have a sparkling city without slums. My generation got rid of the squatters. When the last squatter hut went, metaphorically, I gave every member of my team a gold medal.

But they will do something better. You watch the housing estates in London or in New York, the slums, the tenements, and you know how horrifying it is. You are scared to go in. When you go in, you feel a chilling fear. We will not have that in Singapore, with this upgrading programme. You need powers of analysis, imagination, sense of reality, drive, and character.

There can be no end to this argument. I am prepared to say to the people at large, (I read what Walter Woon says, "let us have a referendum.") are they in a position to judge? Is it within their range of experience? I have been through this life and had I lived a different life in Lee and Lee, I would never have this experience. Because I have gone through this, I say do it. I am in a position to judge. I say I am prepared to put my experience and my judgement against all the arguments that doubters can muster. In five to 10 years, when it works and Singapore has a good Government, this formula will be accepted as conventional wisdom. [Applause].