Given that the GDP Bonus is tied to GDP growth, it then becomes important to clarify whether the nominal or real growth rate is used.
As for the question on the Performance Bonus, my curiosity was piqued by a PSD response in Forum which Leong Sze Hian questioned. The PSD was not completely clear, with its statements suggesting that the MR4 benchmark was all-inclusive (and in fact that had been my impression from the Ministerial Salary debate laste year), but going on to refer to an "average Performance Bonus".
I do understand what a benchmark is. It is just that I had always all along thought that the MR4 benchmark represented the theoretical maximum upper-limit for Staff Grade I officers. The fact that it is not, is something that to the best of my knowledge has not explicitly stated in public before.
GDP BONUS FOR MINISTERS
15. Mr Siew Kum Hong asked the Prime Minister whether the GDP Bonus for Ministers is awarded based on real GDP growth or nominal GDP growth.
The Minister for Defence (Mr Teo Chee Hean) (for the Prime Minister): Mr Speaker, Sir, the GDP Bonus is awarded based on the real GDP growth rate. The bonus is paid out in March every year, based on the real GDP growth rate of the preceding year.
Mr Siew Kum Hong: Sir, I have two supplementary questions. My first question is to ask the Minister whether the GDP growth rate, even the real GDP growth rate, is the most appropriate matrix because the bonus really should be tied to the benefits to Singaporeans arising from economic growth, whereas GDP growth, as a measure, includes the wages paid to foreigners. So my question is, would the Government consider a matrix that strips out components of GDP growth that do not benefit Singaporeans directly so as to more accurately measure the benefits to Singaporeans from the economic growth?
Sir, my second question is this. The Public Service Division recently disclosed that the pay for the Ministers at the MR4 Grade, which is 77% of the benchmark, and I quote, "includes all bonuses such as the 13th month bonus, the average performance bonus and the GDP bonus". The reference to an "average performance bonus" suggests that some would be paid an above average performance bonus. Does it then mean that the better performing Ministers will be paid more than 77% of the benchmark?
Mr Teo Chee Hean: Sir, the issue of finding the best approach to try to measure and pay according to performance for public servants, including Ministers, was debated extensively in this House in April last year. And it is not easy to find a very good measure, a precise measure, and I have explained that the GDP Bonus is a good proxy for most things in the economy. I do not know of any measure which strips out the components in the way that Mr Siew has suggested, which is reliable and well understood by Singaporeans as a whole. So I would still suggest that for ease and simplicity of understanding and implementation, as a broad measure of how the economy has been doing, the real GDP growth rate is a good proxy.
Mr Siew should understand what benchmarks are. Benchmark is a typical salary for a typical grade. If you take an employee in a company and you say, this is his salary grade, there will be some variations within that. Some will get more, some will get less. And this is indeed what we do want to achieve because if we want to link performance to pay or pay to performance, then there must be some variability within that. So the benchmark rate is in fact the typical rate which an average Minister or employee in that grade will be paid. Some may get less, some may get more.