It’s the Review Committee that doesn’t get it

Singapore Democrats

The Committee for Ministerial Salary Review has issued a statement saying that Singaporeans have misunderstood its recommendations. In trying to clear up these “misunderstandings”, it posted on its blog several explanations on why it made the proposals that it did.

Unfortunately, it seems that it is the Committee that doesn’t quite get what Singaporeans are so angry about when it comes to paying the Ministers the kind of salaries they get – even after the proposed cuts. For example, in Question 1, the Committee asks:

1. Why link salaries to top earners?

This reflects the level of talent we hope to attract and the need to pay competitive salaries to minimise the opportunity cost for these people to come forward to serve. See paras 1 to 3, and paras 32 to 35.

SDP: What the people are unhappy about is that the despite the extraordinary amounts that our current ministers are paid, their performances have hardly been extraordinary. In fact, they have been quite dismal: Continued flooding, frequent train service disruptions, a sliding economy, over-dependence on foreign workers, depressed wages, increased cost of living, low productivity of workforce and so on.

If the high salaries have not been able to attract talent that have resolved such problems, what makes the Committee think that the continued payment of high salaries will?

2. Why have “clean wage”? Why not give perks?

Unlike many countries, Singapore has chosen a transparent system where salaries are fully accounted for through a ‘clean wage’ with no hidden perks and privileges. See paras 15 and 16, and paras 37 and 38.

SDP: No one is saying that there shouldn’t be a “clean wage”. What everyone is saying, however, is that the current wage formula is not transparent. Ministers’ salaries are not made public. Their Perfomance Bonuses (which can amount to 14 months of the basic pay) is kept secret.

The truth is that the Government has not chosen a transparent system, as the Committee suggests. Even with the revised formula, Ministers’ are still entitled to a Performance Bonus which may still be kept secret.

3. Why not peg to foreign leaders’ pay?

We studied in detail whether we should peg the salaries to those of foreign leaders. In the end, we decided not to adopt it as the conditions in other countries are different and so are the compensation principles. More specifically, doing so would not allow us to follow the principles of paying competitive salaries and clean wages. See paras 66d.

SDP: Singaporeans are concerned why even a junior minister is paid more than the President of the United States. Many reject this principle. Telling us that conditions in other countries are different and therefore Committee decided not to use international benchmarks is simply regurgitating the PAP’s stand, it does not exlpain anything.

4. Why not simply have a fixed salary, with no bonuses?

We decided on a total salary pegged to an annual benchmark. Without bonus, the entire sum would be in the form of a higher fixed salary. We decided against this as there was strong feedback that some elements of the politicians’ pay ought to be pegged to their performance and outcomes linked to the well-being of Singaporeans. So we took a balanced approach of reducing the quantum of bonus to a level that we think is still substantial enough to ensure that the pay packages of the office holders move in accordance to the well-being of Singaporeans. See paras 67 to 71.

SDP: This is the disconnect. Singaporeans agree that Ministers should be incentivised to perform well. But why should the incentives always come in the form of money? Is not the honour and privilege to serve he country good enough incentives? Does conviction count for nought? Is passion for public service meaningless?

It is not that Singaporeans want to make paupers of our Ministers (note: even without the bonuses the Ministers are already the highest paid politicians in the world) but our country’s leaders cannot be driven by monetary reward.

5. Why is there a need to have two bonus components?

The salary formula provides for a Performance Bonus which reflects a person’s work in leading a Ministry or helming a portfolio, as well as contributions at Whole of Government level. The National Bonus is a reward for team effort to raise the socio-economic well-being of the people, especially the middle and lower income earners. See paras 70 to 73.

SDP: These bonuses (GDP and Perfomance) have been in place for many years. And yet we have witnessed income inequality widen in Singapore. Suicides have been o the rise, stress and depression among the people are as high as ever, and more and more people are queueing up at soup kitchens.

Obviously, these bonus packages have not helped the socio-economic well-being of the people. Why is the Committee re-packaging them and trying to sell them as if they were new? Does the Committee mean to say that it is only with the proposed National Bonus that the Ministers would be incentivsed to help the middle and lower income earners?

6. What are the components of the National Bonus?
Why not have deferred payments since results of policies take time to be seen?

The National Bonus has four socio-economic indicators with each accounting for 25% ie the National Bonus has a strong link to the social-economic progress of average and lower income Singapore Citizens. The Committee did not recommend deferred payments as this would remove the direct link to actual performance in any one year. See paras 72 to 74 and footnote 11 as well as Annex C.

SDP: Few Singaporeans are concerned about whether bonus payements are immediate or deferred. This question is a red herring. What they are unhappy about is that Ministers, despite their perfomances, continue to be paid secretive bonuses that amount to millions of dollars.

7. What is in the new MR4 Minister salary? Are there bonuses on top of that?

An entry level MR4 Minister will receive an annual salary of $1.1m if 1 month AVC is paid, he is a good performer and targets for the National Bonus indicators are met ie Annual Salary = fixed pay + variable pay (AVC, Performance Bonus and National Bonus). In line with the “clean wage” principle, this is all the appointment holder gets. In a minimum bonus situation, he gets 13 months ie $715,000. In a maximum bonus situation, he gets 26.5 months ie $1,457,500. See worked examples at paras 82 to 83.

SDP: See our response to Question 4. Incidentally, how many Singaporeans are paid bonuses amounting to three-quarters of a million dollars and effectively doubling one’s basic salary? Think about it: One can buy two HDB flats a year just with the bonuses.

8. Why do appointment holders also get the MP allowance?

As is international practice in Westminster Parliamentary systems, all political appointment holders will also receive MP allowances as they have the dual roles of being MPs which involve looking after the needs of their constituents and raising their concerns in Parliament. See paras 106 to 109.

SDP: When it comes to benchmarking the Ministers’ salaries to foreign leaders, the Committee rejects the idea saying that the situation in Singapore is different. But when it comes to paying the Ministers’ MP allowances on top of their salaries, it cites the Westminster system. It is this kind of cherry-picking of arguments that make Singaporeans feel that the Committee is simple echoing what the PAP wants, and not addressing the real issues of high ministerial salaries.  

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