Excerpt from Parliamentary Debate on 30 June 2000:
Mr Low Thia Khiang (Hougang)(In Mandarin): Mr Speaker, Sir, the principle of pegging Ministers’ and top civil servants’ pay to that of the top earners in the private sector was debated in this House in 1994.
My stand on the matter remains unchanged. I do not agree with the principle in the White Paper. In my opinion, those who decide to take up politics and those who decide to earn more money for themselves are two distinctly different categories of people. If you want to peg the pay of political appointees like Ministers, Ministers of State, etc., to the top earners in the private sector, and say that without doing so, you would not be able to attract suitable talents into politics is virtually degrading the politicians’ noble spirit of serving the nation and serving the people.
It is said that times have changed. We should be more realistic and look at this issue from the point of view of market economy. But we all know that governing a country with the national resources as its backing and doing business with one’s private capital are two different things altogether.
The private sector faces market competition, even competition in the international market. Among the top earners in the private sector, some are owners of enterprises and some are salaried employees. But do not forget that even world-class banks can collapse and close down! The PAP Government does not own Singapore, neither are the Ministers’ salaried employees. They rule the country on a mandate given to them by the people after a general election. Once they are in power, they can put to use the assets of the State. They enjoy great power to decide everything. They can also formulate and implement all sorts of policies to ensure that they can be returned safely at the next general election. In Singapore, competition in the election market is very limited. As such, although both can be described as markets, there is a vast difference between them.
Since the electors in Singapore have elected the PAP to form the Government to rule the country, the PAP Government can decide how much their Ministers are worth. Is it asking for the sky? It is left to the people to judge.
Actually, the Government does not have to go through all the trouble, using all kinds of computation methods to peg the Ministers’ salaries to the top earners in the private sector, just to justify the amounts they are asking for. There is no need to use the income of the top 24 or top 48 earners in the country as a benchmark to calculate the Ministers’ salaries. They might as well put it in a simple and straightforward manner and say the Ministers need to be paid how many hundreds of thousands of dollars a month, otherwise the Ministers would not have enough money to use!
In the case of the civil servants’ salaries, I believe there is just a very small number of senior civil servants who are going to receive substantial pay rise in this exercise. Thanks to the Ministers, they are given these pay increases to avoid having a big gap between their salaries and those of the Ministers, lest it may be difficult for the Cabinet to account for it.
The Government says that it is transparent and the Ministers’ salary system is also transparent. But the information provided by the Deputy Prime Minister in Parliament yesterday was not transparent enough. May I ask whether the Ministers’ salaries as reflected in Handout 2 are only the basic salaries under the Ministers’ salary system? I would like to request the Deputy Prime Minister to disclose the full information on the gross salaries of the political office-holders and the civil servants of the various grades, including the various variable components, bonuses and other allowances payable to them.
Mr Speaker, Sir, we must not forget that the people of Singapore are paying a high price to engage this batch of talents to become Ministers. We sincerely hope that the return received by the people will not be mere peanuts.
Mr Chiam See Tong (Potong Pasir): Sir, I am much obliged to you for allowing me to join in the debate.
Yesterday, we debated on the disparity of incomes of Singaporeans. The lowest 10% of our workers were reported to be earning as low as $133 a month. The Minister said that the Straits Times had made a mistake in its report. Assuming that there were mistakes in that report and we correct it by doubling the reported wage of $133 to $266 a month, then rounding it off to $300 a month. Even at $300 a month, that is a very low income. A man can barely survive on $300 a month these days.
Sir, I am certain that Ministers must be aware that there are Singaporeans who are barely scraping the bottom of the barrel to make a living. Does it not prick their conscience then when they themselves ask for high salaries at over a million dollars a year? If we take the average worker’s wages at $2,000 a month or $24,000 a year, and the Minister’s salary at $1.4 million a year, then the Minister is earning something like 60 times more than an average worker in Singapore. It means that for a Minister to work for one year, the average worker in Singapore has to slog for his lifetime for 60 years. This, to me, somehow does not look right.
Ministers are supposed to be servants of the people. They are to take care of the people and to give public service to lead the people, particularly by example. How can our Ministers have the moral authority when they take their posts purely on the profit motive by asking such high salaries? At the moment, our Ministers are paid the highest salaries in the world, more than Presidents, Prime Ministers and Ministers of other bigger and richer countries than Singapore.
In America, President Clinton is paid about S$630,000 a year, half of what our Ministers get and one-third of that of our Prime Minister. I believe the work of the President of the United States is definitely more difficult and more onerous than that of any of the Ministers and Prime Minister in Singapore. Yet, they can live quite comfortably on a much lower salary than our Ministers and Prime Minister. It is not that America is poorer than Singapore. It is not that it is unable to pay its President well. If they wanted to, the Americans can afford to pay their President three or even four times more than the Prime Minister in Singapore. They certainly can afford to do so, since it is the richest country in the world. In fact, a few of the American companies earn more money a year than the whole of Singapore. Yet, the Americans choose not to pay the President and their Ministers high salaries.
The question is: why do Americans choose not to pay their President and the Ministers high salaries, as Singapore is doing? The reason is that the Americans feel that those who aspire to take up public office must have an element of sacrifice. It must be seen that those who take up public office are there to serve the public, and not to make a profit out of that office. The President and his Ministers will then have the moral authority to lead. They are basically there to serve the people and not to make money out of their office.
I think the Americans are right on that point. We must not scoff at American values. That country has not only survived over 200 years, over two world wars, but has become the most powerful and the richest nation in the world. There must be something that we can learn from the Americans in regard to the way they reward their President and their Ministers. I hope Singapore and its Ministers shall take note of that.
I am not envious of the high salaries paid to the Ministers. My concern is more for the future of Singapore. What sort of values should we set for young Singaporeans? On the one hand, leaders of Singapore urge the people to be more communitarian and not to be so self-centred, individualistic and care only for oneself. But, on the other hand, where the Ministers’ salaries are concerned, they do not believe in the communitarian way. The Ministers want their salaries to be pegged to the private sector’s high earners. The private sector’s motivation is on profit. Private sector earnings and level of salaries are entirely based on profit and earnings. Whereas on the part of Ministers, their motivation is not profit orientated but on nation building. The Ministers then should not be asking for salaries based on high earners in the private sector, but should be based on other principles. I think the fairest way is to ask how much a Minister needs to have a comfortable life.
In the debate on the White Paper on Ministers’ salaries in 1994, I told the House that I estimated that about $50,000 a month should give a Minister a comfortable living – a bungalow house, servants, two motorcars and with a chauffeur, annual holidays and children’s education. I note that NMP Walter Woon in the same debate also proposed a similar figure of about $50,000 a month or $600,000 a year. He said that could be a base on which the Ministers could work. I tend to agree with Dr Woon.
I think that as long as the Ministers are given a dignified comfortable standard of living that should be enough. That should be the criterion. We cannot factor in the profit element. The profit element is a private sector practice and should not be followed because the Ministers are not running a private company. They are running a country, a nation, hopefully, in our case. They are leaders of the people and they should lead by example. If our leaders show our people that they are there in public positions and claim for themselves huge profits, the wrong signals shall definitely be sent to all Singaporeans, including our young Singaporeans. They shall become cynical and the only thing that concerns them is money. In fact, if money is the only motivation why one does a certain job, that person shall not do that job well.
Look at the great achievers in the world. When asked why they take on that job or do that thing which they are good at, the answers are inevitably not the great amount of money they can earn, but the love of their job or the things they are doing. For example, when Michael Chang and Boris Becker, world famous tennis players from America and Germany respectively, were asked why they devote their lives to playing tennis, they said that they love the game and not the millions of dollars they can earn or have earned. Similarly, if Ministers really love their job and want to serve the people well, they should not be asking for high salaries. By asking for high salaries, they are giving wrong signals to Singaporeans that they do not love their job but for the huge profits that they can earn.
Speakers in this debate and the debate on the White Paper in 1994 had commented on the unfairness of pegging the Ministers’ salaries to the six highest earners in a selected group of professions in the private sector. The reason mainly is that the private sector of the same group of persons may not be drawing the same salaries in the following year and also that they are taking bigger risks.
A more equitable method is to peg our Ministers’ salaries to the world leaders of other countries. A good example is to take the President of the United States as a base for which we can work on. I do not think that our Ministers will complain on that. We should compare the salaries paid to those in the public service in Singapore to those in the public service of other renowned countries and not compare the public sector salary with those in the private sector. The public sector and the private sector cannot be compared because the two are motivated by completely different reasons. One is for public good and the other is purely for profit. The two cannot be reconciled. Therefore, public sector salaries cannot use the private sector salaries as a benchmark.
I had read a report in the Hansard where Members of Parliament in England were debating on the increase of Members’ allowances. Almost each of the Members there who rose to speak began by saying how embarrassed they were on speaking of the increase of their own remuneration. It can be seen from that debate in England that the values of the English parliamentarians are different from those in Singapore. Over in England, the parliamentarians there were terribly embarrassed when they were speaking on the increase of their own pay. One notes that it is not so in Singapore. The Ministers in Singapore have affirmed confidently that they have a right to be paid the proposed high salaries and are not a bit embarrassed by it. This is an observation I note in the difference of attitudes and values between the Singapore Parliament and the English Parliament.
In conclusion, I would just like to state what I heard last night at my meet-the-people session. One grassroots member, on hearing the revision of the Ministers’ salaries, said, “Wow, can buy a house every year.” Another remarked, “Just like striking a lottery each year.”
The Prime Minister (Mr Goh Chok Tong): Mr Speaker, Sir, Singapore is not the United States. The US has a population of 280 million people. We only have a population of three million. The US is a huge country. We are just a little red dot. So running Singapore, I believe, is much more hazardous and difficult than running the United States. In Singapore, people will require a good government much more than the Americans will require a good government. If the Government does not run Singapore well, the whole country can disappear.
Some MPs have told me that while they support the salary revision for the public sector, they are concerned about the timing because the CPF cut has not yet been fully restored.
There are two reasons why we are proceeding with the salary revision now.
First, in November 1994, when we debated the White Paper on Competitive Salaries for Competent and Honest Government, we said that the salary benchmarks would be reviewed in five years’ time.
Second, the gap between private sector and public sector pay has become a gulf since the start of the Asian financial crisis. This is because the Government froze the salaries of Ministers and top civil servants during the crisis. This was despite the fact that the salaries were due for upward revision. For example, the private sector benchmark for Ministers’ salaries at Staff Grade 1 had increased by 13% in 1998 and 29% in 1999. Not to adjust the Ministers’ and civil servants’ pay now when we have emerged from the crisis and resumed strong growth, and especially when it is fully justified by the private sectorbenchmarks, is to fall into a state of paralysis experienced by governments elsewhere when they faced the issue of public sector pay revision. Because they were unable to keep the salaries competitive vis-a-vis the private sector, inevitably, their countries saw a decline in the quality of people wanting to be MPs, Ministers, judges and civil servants.
We are not, however, insensitive to workers’ feelings and public sentiments. Because the CPF cut has not been fully restored, we are not restoring immediately the pay of Ministers and top civil servants to the private sector benchmark for Staff Grade I, but phasing it in over three years. These office-holders will receive only 80% of the benchmark in the first year. The basic monthly salary for Ministers will therefore increase by only 0.3% this year. With bonuses, the annual increase for Ministers will be a modest 12%.
Overall, what all this means is that the wages of top private sector talents in Singapore will face significant upward pressure in the years to come. Companies in Singapore will have to pay their top local executives internationally competitive salaries to retain them. Certainly, they have to pay internationally competitive salaries for foreign talents. But let me add here that expatriates are excluded from the calculation of the salary benchmarks.
The Government has no choice but to match these upward trends in private sector pay in order to attract its fair share of talents. But the Government does not intend to be a price-setter. It will not lead the pace of pay revision in Singapore. It will only be a price-taker. We will only respond to the trends in the private sector, with a lag of one year, to ensure that public sector pay remains competitive.
Another reality we cannot escape from is the widening income gap between the top and bottom earners. In every society, there will be a bottom 10% and a top 10% of wage earners. The Government cannot artificially reduce the income gap between these two segments of the population by forcing upwards the salaries of the bottom 10%, or forcing downwards the salaries of the top 10%. This is a market economy, not a command economy. What the Government will do, however, is to ensure that all Singaporeans have an equal opportunity to make it to the top 10%. At the same time, we will help the relatively poor to ensure that they also benefit from the general increase in prosperity. The Government has already put in place a system of subsidies for education, housing and health. It has also implemented several assets-enhancement programmes. We will continue to help the lower-income Singaporeans increase their assets, as well as improve their earning capacity through training and skills upgrading. We will give them hope through investments in their children’s education and future.
The real lesson for me from Williams College was: without a good government, all the good theories of economic development count for nothing. Countries with weak or bad governments will go downhill, suffer internal strife and may even break up. They will not be able to deliver a high standard of living for their people. And when a country goes down, it is not the able people who will suffer most. It is the man-in-the-street. They are the people who cannot migrate easily. They are the ones who need a good government most.
So ask yourself, “Where will Singapore be 30 years from now? What type of government will produce you a safe, stable and prosperous Singapore?”
Let me help you answer the questions by giving you some simple arithmetic.
First, the wage cost of all the political office-holders will be $34 million after this pay revision. There are three million Singaporeans. What is the cost of Government per capita? $11 per year or about five plates of “char kway teow” per Singaporean.
Second, in 1995, the Government made a contribution of $200 into the CPF account of all Singaporeans aged 21 and above and an additional pro-rated contribution of up to $300 to those who had contributed $750 themselves to their CPF account. The total amount paid out was about $800 million. What was the pay-out per Singaporean? $270, if we divide it by a population of three million.
We can do more such CPF top-ups in future, provided we have good growth. $11 per capita per year for a Government that can produce good economic growth and give you $270, even if it is once in five years, is surely good value for money.
Summing up, it is wrong to focus on the individual pay of Ministers in isolation. He is only a member of a team. You should focus on the cost of my Government and the benefits and consequences of having that Government. What is the cost of my Government to each Singaporean? Five plates of “char kway teow”! What was the price each of us would have paid if our economy had shrunk by 5% during the financial crisis? $3,166! And this price is only an example of the huge price you have to pay for a weak or bad government.
We have put in place a virtuous cycle of good Government, economic growth and benefits for the people. For your own benefit, it is wise for you to strengthen, not break this cycle.
Mr Low Thia Khiang: Sir, may I seek a clarification from the Prime Minister?
Mr Speaker: All right.
Mr Low Thia Khiang: Would the Prime Minister also conclude in his proposed thesis that the higher the Ministers are paid, the higher the return in benefit for the people?
Mr Goh Chok Tong: Sir, when you do a doctoral thesis, you do not do such a simple correlation that the higher the pay, the more the benefits for the people. You have to look at what the Government can deliver and if you need to have high pay to attract good people into government, then of course, there is a link between that and the per capita GDP. Where you have high pay, and you pay people who do not measure up, then of course your performance cannot increase. So the link is not between the high pay. The link is between good people whom you have to attract with the right pay. In our context, it has to be related to the market, and you see the results later on. What I am saying is, judge this Government in totality for what it has performed. Do not look at individual Ministers’ pay alone. Look at the wage cost of Government as a whole, the benefits to you, and the price of a bad government.
Come down to the #ReturnOurCPF 4 protest on 27 September 2014 at 4pm at Hong Lim Park. You can join the Facebook event page here.