Speech on the Ministerial Statement on Civil Service Salary Revisions

OK here it is. I finished it at 3am last night, and made quite a lot of amendments in the morning and then over the course of the sitting. I ended up being the last speaker for the day. CNA has a video here.

Minister Teo and some MPs told me it was a good speech, so I guess I did OK. In all honesty, when I'm up there reading off my speech, I'm so caught up in doing it and making sure I deliver it the way I want to, that I really don't know how it's going. But it's a good feeling for your fellow MPs to tell you that you did well.

It was 7pm by the time my turn came, 7.30pm when the sitting finished. I'm too tired now to give my usual commentary, plus I've got to start writing another speech for Wednesday (on the Spam Control Bill). So here's the speech for now, and I'll post more about it another time.

MINISTERIAL STATEMENT ON CIVIL SERVICE SALARY REVISIONS

9 April 2007

Mr Deputy Speaker Sir, thank you for allowing me to participate in this debate. I know that the hour is late, and I beg the indulgence of the House while I make my speech.

I will start by stating my support for the principle of paying ministers and top civil servants fairly. But I would draw a distinction between ministers and Administrative Officers. I will first discuss Administrative Officers, or AOs.

Administrative Officers

Sir, the Administrative Service is a career. It is a job for AOs, albeit one in public service and hence expected to have a greater sense of purpose and an accompanying element of self-sacrifice.

Seen from that perspective, we cannot fault AOs if they view the public service and the private sector as alternative career paths, between which they have to weigh the relative merits. It is a choice between two competing jobs, each with their own attractions, and we must be realistic and accept that remuneration plays a big part in the decision-making process.

I therefore agree with the benchmarking of Administrative Service salaries with the private sector salaries, with two caveats.

Firstly, the benchmarks should be adjusted for the fact that AOs are entitled to pensions if they serve long enough. Pensions have gone the way of the dinosaur in the private sector. It is therefore inconsistent to benchmark Administrative Service pay to private sector salaries on the one hand, and to retain a pension scheme on the other. We should either do away with pensions completely, or adjust pensionable officers’ salaries to take into account their potential pensions.

Secondly, and more importantly, the officers in question must really be that talented and must actually contribute that much.

Sir, I spoke to a lot of people over the past few weeks about this issue. And curiously enough, I have found that those who argue against high salaries for AOs are frequently serving or former civil servants. They question whether the AOs are all that talented. They believe that AOs are almost never asked to leave, that they receive private sector salaries while retaining an iron rice-bowl and with the prospect of a pension to boot, and that they would not command such salaries if they enter the private sector.

So either those in the civil service know something the rest of us do not, or there is a serious perception gap. Perhaps what is needed is to increase awareness about the contributions of AOs and to have greater transparency in how they are held accountable for their performance.

Paying ministers fairly

Sir, I think that the considerations are very different when it comes to ministers. I agree that people should not have to make “unreasonable financial sacrifices” to enter, or to stay in, public service.

But that simply begs the question of what is unreasonable. What level of salaries would be fair? What sacrifices would be considered unreasonable?

Sir, I agree that ministerial salaries need to be high enough, that worthy candidates will not be deterred from public service by financial considerations. In fact, I do not think that the current MR4 benchmark of $1.2 million per year is too high in today’s world.

I know that many Singaporeans will disagree with me. But we have to be realistic. In a globalised economy where there is massive demand chasing a limited pool of top talent, $1.2 million per year is very possibly at the lower-end of the scale for the very best of top talent.

And I agree that ministers should be entitled to a comfortable lifestyle. I think that we would be demanding an unreasonable financial sacrifice, if we were to ask potential ministers to downgrade their standards of living upon entering public service.

Top talent will expect a nice house, a nice car, or maybe even two or three nice cars, including for the wife and children. Overseas universities for their children, good medical care for their family and parents, luxurious holidays, adequate insurance and sufficient investments for a decent retirement.

Sir, how much does it really take to provide for all that? $1.2 million per year seems enough to me. Still, I am willing to accept that it may not be enough – I make nothing near those levels, and I would hardly know what expectations such top-earners would have. So I am prepared to agree that the number may need to be higher, and may even need to be $1.6, $1.8, or $2.2 million.

But the present benchmarking system is flawed in its mechanics. Many have pointed out these flaws, and I will not repeat them. The only suggestion I would make is to introduce a cap which can be revised from time to time if the Government feels that it is not sufficient for a fair standard of living for ministers. There should also be an adjustment when a minister or top civil servant becomes entitled to a pension.

What it means to be a minister

But the present benchmark is not being changed, and there is no cap. There is no linkage between the benchmark and what it can buy. There is only a linkage with the top earners, whom I think we can all agree will earn more and more as globalization gains pace.

Beyond what is needed to sustain a fair standard of living, what does more and more salary go towards? The salary becomes about the opportunity cost of public service, losing out on the millions waiting in the private sector. It becomes about envy of one’s peers, those raking in the big bucks at the top of the corporate ladder. It becomes about valuing our ministers by their salaries, and not their contributions, both tangible and intangible.

Sir, all that sends the wrong message about our political leaders. It equates political leadership with management. We often hear the phrase “running a country”. I think our ministers do more than just run Singapore. They lead Singapore.

Government is more than just management. Competency and ability at leading and managing an organisation, at problem-solving and policy-making, are in and of themselves not enough to make a great leader. They might be necessary, but they are never sufficient. It might make for an excellent civil servant, but it is not enough for a political leader.

Sir, ministers cannot be just good managers or able technocrats. They must be more than that. They must be leaders of men and women, leaders of Singapore and Singaporeans. A minister must inspire respect and confidence. A minister can be appointed to the office, but he or she will command respect and confidence only because of the measure of the person that he or she is.

But what is the message sent to society when we focus so much on salaries and money, when we equate government so closely with CEOs and COOs and CFOs, lawyers and accountants and engineers? The message is that our ministers are really just managing the country, and not so much leading the people.

Sir, I do not think that that is right or healthy. We rely on the civil service, including the Administrative Service, to manage the country. We look to our ministers to lead us.

I think it is safe to say that every one of us in this House are honoured and privileged to be here. It was a great honour for me to be appointed as a Nominated Member, and I am sure it was the same for my fellow Nominated Members. I imagine that it was an even greater honour for all of the elected Members who won the trust of their constituents, and for Ms Sylvia Lim who won over enough voters to qualify as an NCMP.

But the honour and privilege is greatest for the office holders. We Singaporeans have reposed our trust in our ministers, to lead us into this ever more uncertain future that we call a post-9/11 globalised world. That is, I think, the greatest honour that any Singaporean can have, to be so trusted by his or her fellow Singaporeans.

This honour and privilege cannot be measured in monetary terms. It is unquantifiable. And I would argue that it means far more than any amount that a company can ever pay to an executive. I would even go so far as to say that any person who disagrees, who cares so much about what he or she is paid, someone to whom this honour and privilege is not enough, is not a suitable leader and is not fit for political office.

Being a minister involves a lot of sacrifices. Most of them, such as demands on one’s time and the loss of privacy, are non-financial. And I am sure that many, if not most, who have been asked to serve but declined, did so because of these non-financial sacrifices. So for these people, increasing ministerial salaries would not make a difference.

As for the others, for whom the decision against public service turned on the financial consideration, I would argue that we should not have them in government anyway. They are not suitable for political leadership at all. Their priorities are skewed against public service. And yet, increasing ministerial salaries would pave the way for precisely this group of people to take up public office.

Perspectives

Sir, Singaporeans have been asked to put some perspective around the current $45.5 million for the political appointees, being 0.13% of government expenditure and 0.022% of our GDP. I think there are some other perspectives that can be put around these numbers.

At the revised MR4 benchmark of $1.6 million per year, a minister who serves a full five-year term would have made $8 million. Serve two terms, and that becomes $16 million plus a pension. Even if the minister spends a million dollars a year, there would still be $6 million left over for a retirement in style.

Meanwhile, Workfare will cost the Government $400 million a year. But it is intended to benefit the bottom 15% of the workforce. In 2005, we had 2.36 million workers. The bottom 15% means 354,000 workers. Workfare will cost over 7 times of the aggregate revised salaries of political appointees, but benefits 10,000 times the number of political appointees we have.

Or let’s take Public Assistance. MCYS recently announced a revision to the amounts that Public Assistance recipients will get. Some Members felt that the amounts are still not enough, especially for one-member households. Dr Lily Neo has calculated that a minimum of $400 per month was needed by such households, yet the revised rate for them is $290 per month.

With 3,000 households on Public Assistance, an across-the-board increase of $110 per month would mean an additional expenditure of $3.96 million a year – 7% of the amounts that we will pay political appointees every year after the revisions. Yet, we decline to do so, fearing an erosion of Singaporeans’ work ethic, never mind that one must be unable to work to qualify for Public Assistance.

Sir, there are a lot of different perspectives that can be put around ministerial salaries. My fear is that the singular perspective being applied, of what our ministers could potentially be earning in the private sector, ignores other perspectives that are equally valid and equally important.

We place so much emphasis on using public funds wisely, on sending the right message to society, on not inadvertently creating new problems when we address existing ones. These same considerations must apply when we consider ministerial salaries. It is not just a question of the number, whether we can afford it or its size relative to the stakes involved. There are other considerations involved, and other potential repercussions.

And my greatest worry is that an open-ended linkage between ministerial salaries and top earners, which is how the benchmarks work in their current form, could in the long run undermine the moral authority that a government needs to lead the people.

Moral authority

As our leaders, ministers wield a great deal of authority. They have legal authority due to their positions. They also have moral authority, by virtue of being our elected leaders to whom we have entrusted the reins of government.

Sir, our leaders must maintain that moral authority, so that Singaporeans will instinctively trust that whatever is done by the Government is done for the good of the country. Government is more, much more than mere management. There is an intangible, moral dimension to government and political leadership that civil servants are not equipped to deal with, that have to be addressed by duly-elected ministers.

Our leaders need to have this moral authority to lead the nation, so that whenever we have to ask Singaporeans to make sacrifices for the good of the nation, whether it be workers bearing the brunt of CPF cuts or NSmen putting their lives on the line to defend Singapore, they will respond without question, willingly and courageously, because they trust and believe in our leaders.

I daresay that our NSmen will risk their lives if ordered to by the Prime Minister or the Defence Minister, but not if it is the Permanent Secretary. It is this moral authority that makes all the difference between a minister and a civil servant, a leader and a manager.

Sir, the track record of the ruling party has been almost impeccable. With the benefit of 20/20 hindsight, many an unpopular policy has proved to be the right choice. So, by and large, Singaporeans remain trusting of the PAP, and that shows at each General Election since independence. This present government is no different. It won last year’s election by a landslide, and it has the requisite degree of moral authority.

But we need to ensure that future governments will continue to have that same level of moral authority. The benchmarking system puts that at risk. When we focus on salaries to the exclusion of the moral imperative and considerations of public duty and service, we endanger the moral authority of the government to lead. Because then, cynicism creeps in, and it taints, weakens and may ultimately destroy the bond between the government and the people.

This is exacerbated by the surrounding context of a widening income gap. During the Budget debates, this House heard so much about the income gap, about how it is inevitable, and about what we are doing to address it. The MR4 benchmark is such that ministerial salaries are tied to the very narrow tip at the top of the pyramid, but are decoupled from the stagnant broad base at the bottom. The benchmark itself becomes part of the problem.

Also, a large part of ministers’ bonuses are tied to Singapore’s economic growth. This growth represents the sum total of the efforts of all Singaporean citizens, permanent residents and foreign talents. But thanks to globalization, many Singaporeans are not reaping the fruits of their labours, and are instead struggling to stay afloat. Ministers benefit from this economic growth through the GDP bonuses, even as many Singaporeans do not. There seems to be a certain degree of inequity here.

Sir, we are told that it is an admirable sentiment to want our ministers to be people with that sense of self-sacrifice, who are prepared to make a financial sacrifice -- a reasonable one – to serve the country, but that the real world is different and that this view is unrealistic.

But to me, this way of thinking is not unrealistic. Instead, it is actually an important sieve that filters out the types of people that we should not have in government, people whose desire to serve would be outweighed by a few million dollars, even if their standard of living is not compromised.

I believe that our ministers did not make the decision to enter public service lightly, and they have made great sacrifices in doing so. And because of that, Singaporeans respect and salute them, and give them the moral authority to lead. We have to ensure that future governments are able to enjoy the same degree of moral authority.

Conclusion

Sir, I think we are all idealists in this House. We all believe in this great social enterprise that we call Singapore. We have to, otherwise we would not have sacrificed our time to be here, we would not have heeded the call of duty and served.

We must believe that we are not the only ones with this idealism and sense of purpose. We must believe that there are many other Singaporeans who feel strongly enough about our nation, that they would be willing to make the necessary sacrifices to serve the country.

If we have reached the stage where money is necessary to draw able Singaporeans into public office, then I think we might as well pack up now, because we would have failed, because Singaporeans obviously do not see Singapore as a nation worth fighting and sacrificing for.

Sir, I do not believe that to be the case. To believe otherwise, is to admit failure in our nation-building efforts. I am not prepared to do so. And I hope that the Government is not prepared to do so either, and will show that in future revisions.

Thank you, Sir.