Answering the wrong question on ministerial salaries

[Thick Face Black Heart]

Good article subject, coming from Siew Kum Hong. Although does not address certain points like the spirit of public service being degraded by PAP policies and why the best talent is not joining politics.

Answering the wrong question on ministerial salaries

By now, the highlights of the report by the Committee to Review Ministerial Salaries should be well-known, so I won't rehash them. A search on "singapore ministerial salaries" will quickly bring you up to speed.

There have always been two types of criticisms leveled at ministerial salaries. The first category comprised criticisms of the formula itself, that it led to distortions and did not achieve the outcomes we wanted. These are technical criticisms that implicitly endorsed the principle of pegging ministerial salaries at a discount to supposedly equivalent private-sector salaries.

The second category comprised criticisms of the absolute amount of ministerial salaries, which are seen as being excessive in their absolute amounts and completely out of touch with normal Singaporeans. These are political criticisms that will persist regardless of the formula used, because they stem from a fundamental perception that the absolute salaries are simply unjustifiably high, regardless of the formula used.

Well, here’s what I think: the Committee gave a good answer, but to the wrong question. The Committee’s recommendations will address the first type of criticisms, but will do nothing to stem the second.

I actually happen to think that within the limitations of its terms of reference, the Committee did a pretty good job. That’s because its terms of reference required (and perhaps limited) the Committee to “take into account salaries of comparable jobs in the private sector and also other reference points such as the general wage levels in Singapore”, and to implement “a significant discount to comparable private sector salaries to signify the value and ethos of political service.”

The Committee fixed a lot of the major flaws in the previous formula. For instance, by expanding the sample size of income earners from the top eight earners in six professions to simply the 1000 highest-income Singaporeans, the Committee effectively rendered irrelevant the problem of the 48 top earners being a changing cast while the ministers themselves did not change. Similarly, the new bonus structure is much improved on the previous simplistic reliance on GDP growth as a proxy for the good performance of the Government (and on that, I was reminded of this defence of the previous bonus structure by now-DPM Teo Chee Hean).

But I do think that the Committee was asked to answer the wrong question. The Committee’s terms of reference had already pre-supposed that fundamentally, the proper way to determine ministerial salaries was to compare with private-sector salaries (“how do we calculate ministerial salaries taking account private sector salaries and other guidelines”). In other words, the Committee was only being asked to answer the technical question of precisely how to calculate ministerial salaries based on private-sector salaries.

But to my mind, the question of ministerial salaries is actually a political one (“how do we determine ministerial salaries in a way that Singaporeans can and will support”). And so, we ended up with a technocrat’s answer to a technical question, when what we really needed was a political answer to a political question. Since we didn’t get that, the political criticisms I had referred to will almost certainly continue.

It is clear from the report, and subsequent public comments, that the Government, and the Committee, continue to think about ministerial salaries in terms of private-sector salaries and sacrifice by office-holders, especially financial sacrifice.

I think that is a completely incorrect approach to the question, which as I have said is a political one. This approach will never get true buy-in from the majority of Singaporeans, because they see the Government and ministers in completely different terms.

The Government and the Committee see public service as a sacrifice, as if it is some sort of burden or imposition. But I, and I suspect most Singaporeans, see public service as a calling, as an honour and a privilege. It is something to be proud of, and not something to bemoan and begrudge. That is what the spirit of public service is about.

The Government and the Committee also see private-sector jobs as being closely equivalent to ministerial posts, as if running a company is very similar to running a country. I think most Singaporeans disagree, because they instinctively understand that running a country is a political undertaking that is fundamentally different from running a company, requiring as it does political sensitivities and skills that are not always or usually needed for corporate success (and here, I am talking about popular politics, not office politics).

I do want to be clear: I don’t necessarily think that S$1m a year is excessive. I don’t know for sure what number would or should work, but it probably won’t be a small number. I do think that Singaporeans should be more mindful of wanting ministerial salaries that are so low, that only rich people will run for office. I also think Singaporeans should be careful about cutting salaries so much, that our office-holders become distracted from the all-consuming job of running the country by personal financial needs.

So that begs the question of how ministerial salaries should be set. Well, I think the starting point should be that we do not want money to drive ministerial aspirations, but at the same time we do not want ministers to have to worry about their personal finances.

One way to do this is to figure out what a reasonable salary for a minister would be, such that he/she can maintain a reasonable lifestyle. And by reasonable lifestyle, I would think that the salary should be enough to comfortably cover mortgage payments for a reasonably-priced landed property in a reasonable location; payments for 2 cars for the family; education for a minister’s children (including overseas education); some retirement savings; and so on.

This may or may not be a big number, but then at least it becomes more politically defensible in terms of this being what is necessary to allow the minister to do his/her job without undue distractions and while allowing the minister to maintain a reasonable standard of living. It also completely strips away the effects of the widening income gap, although it does become subject to changes in the cost of living. It represents an approach that can be explained to people and which people can instinctively understand (viz. the need to take care of one’s family).

Sadly, this is not the approach that has been adopted for Singapore. Which is why I think Singaporeans will continue to be dissatisfied with the level of ministerial salaries in Singapore.

The question of ministerial salaries is a critical one for Singapore. Not just for the obvious reason that it affects who enters into government (and who is attracted to join politics in the first place), but also for how it has severely poisoned political discourse in Singapore. Every time something bad happens, there will be people who will complain about how our highly-paid ministers had once against failed – whether or not this is justified. This cannot be a healthy state of affairs for Singapore.

The Government recognized this, hence the Committee. Unfortunately, I firmly believe that these latest changes will not suck all of the poison out of local politics. What a wasted opportunity.

 

[scroobal]

I sometimes think that Siew tends to be simplistic in reasoning however his writing style however suggests some level of sophistication when there is none. I prefer Alex Au's hard hitting and incise style that is if he not veering towards his usual hobby horse.

In this case, he realises that it is not the right answer and he highlighting the restrictive terms of reference is spot on. But he himself which he readily admits does not know what the right solution is.

 

[aurvandil]

I sometimes think that Siew tends to be simplistic in reasoning however his writing style however suggests some level of sophistication when there is none. I prefer Alex Au's hard hitting and incise style that is if he not veering towards his usual hobby horse.

In this case, he realises that it is not the right answer and he highlighting the restrictive terms of reference is spot on. But he himself which he readily admits does not know what the right solution is.

The article is being overly complicated. The sole purpose of the salary review was to recover political support. From the large number of negative responses, it clearly failed. Most Singaporeans are not impressed. Only the usual die hard crew of PAP supporters are saying anything good. The iconic SMRT and flooding failures just days before effectively sealed the death of this initiative.

Given the long leisurely pace Gerald Ee worked, there was a lot of independent survey work done on just how big a cut would be needed to meet the political objectives of regaining political support. Most pointed to 50% being the bare minimum and 80% being the optimum amount. If they were going to cut the small amount that was finally recommended, they might as well as kept the salaries at where it originally was.

 

[TracyTan866]

The article is being overly complicated. The sole purpose of the salary review was to recover political support. From the large number of negative responses, it clearly failed. Most Singaporeans are not impressed. Only the usual die hard crew of PAP supporters are saying anything good. The iconic SMRT and flooding failures just days before effectively sealed the death of this initiative.

Given the long leisurely pace Gerald Ee worked, there was a lot of independent survey work done on just how big a cut would be needed to meet the political objectives of regaining political support. Most pointed to 50% being the bare minimum and 80% being the optimum amount. If they were going to cut the small amount that was finally recommended, they might as well as kept the salaries at where it originally was.

Good discussion points

 

[CannonFairy]

Goodness. I am not an expert, but the way I read this lor soh article which simply says "I have no solution to the ministerial salaries too".

 

[aurvandil]

Mr Brown at his very best.

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[tanwahtiu]

The most corrupt minister in Singapore is no other than LKY himself, paying millions $$ to his cronies, himself and his son LHL.

I sometimes think that Siew tends to be simplistic in reasoning however his writing style however suggests some level of sophistication when there is none. I prefer Alex Au's hard hitting and incise style that is if he not veering towards his usual hobby horse.

In this case, he realises that it is not the right answer and he highlighting the restrictive terms of reference is spot on. But he himself which he readily admits does not know what the right solution is.

 

[Cestbon]

To be fair PM salary peg to 100 time the cleaner pay. If cleaner pay one year plus bonus is $20k then PM salary and bonus will be $2m.

 

[Seee3]

T... The sole purpose of the salary review was to recover political support. ..

Fully agreed, it is all about recovering support but the responses so far have not been very encouraging. Crudely said, it is because people don't think the ministers are worth that much, especially those who have never worked in the private sector (generals). It would be ideal if the pay of new minister can be linked to their last drawn pay. It could be a plus or minus percent of their last pay. In this way, at least it is clear to us, how much he/she is gaining or "sacrificing" for serving the country. So MR4 may no longer be necessary but a cap is still needed.

 

[mojito]

To be fair PM salary peg to 100 time the cleaner pay. If cleaner pay one year plus bonus is $20k then PM salary and bonus will be $2m.

That's not likely to happen. Remember there was a report some time back that says the income of the most lowest earners grew the slowest over the last couple of years.

 

[Fook Seng]

That's not likely to happen. Remember there was a report some time back that says the income of the most lowest earners grew the slowest over the last couple of years.

But by pegging to a low earner or even the median earner, at least the ministers have the self interest to ensure that the lower and the higher strata move up or down in tandem.

 

[palden]

Sinkees are dumb. It is ok

 

[QXD]

I'd say that regardless of where the PAP pegs their salaries, they would still get brickbrats for it.

In the case of pegging their salaries to a cleaner, we will never hear the end of people saying that one Minister could have paid for X number of SG-born cleaners who would have lead a decent life.

To be fair, the psychological impact on any human facing such a large percentage cut would make one squirm, one way or another.

The real test of willpower and sincerity of the PAP in accepting this cut should then be put to the ultimate test.

I seriously dare PAP to subject this recommendation to a conscience vote in parliament. Lift the party whip and make those overfed idiots squirm. Vote no and they will thanked for their sincerity but marked for 5 more years of voter ridicule or culling in GE 2016, vote yes and they will be honour and duty bound to suck it up and perform.

To be fair PM salary peg to 100 time the cleaner pay. If cleaner pay one year plus bonus is $20k then PM salary and bonus will be $2m.

 

[lee6100]

The article is being overly complicated. The sole purpose of the salary review was to recover political support. From the large number of negative responses, it clearly failed. Most Singaporeans are not impressed. Only the usual die hard crew of PAP supporters are saying anything good. The iconic SMRT and flooding failures just days before effectively sealed the death of this initiative.

Given the long leisurely pace Gerald Ee worked, there was a lot of independent survey work done on just how big a cut would be needed to meet the political objectives of regaining political support. Most pointed to 50% being the bare minimum and 80% being the optimum amount. If they were going to cut the small amount that was finally recommended, they might as well as kept the salaries at where it originally was.

This is one of the many crucial times when they should have done what is right, and not what they think is politically right. Behind many of PAP's policies is the huge heavy hand of political motivation - to keep themselves in power. It is normal for the political party of the day to do that but they have to make sure that their citizens are well taken care of - which they have not done. In fact, the average Singaporean has been neglected for many, many years.

Almost everything in Singapore is geared towards elitism. Elitism disguised as meritocracy. It is time to repaint the economic landscape and put Singaporeans back into the forefront of policy making. Without citizens' trust and support, a government's tenure will not last. But does it have the courage to do say, the following?

1. Nationalize the transport system. Transport has strategic economic implications as lost man hours due to delays impinges directly on productivity. Do it on a cost recovery basis, cut diesel taxes (diesel engines are now very clean, re: EU emission standards), cap rental for taxis at $50 so that taxi drivers can make a decent living but cut all surcharges as well so commuters pay less. Cap fares for all students and senior citizens - 50 cents regardless of distance, 24/7. The PAP government will say nationalization scares away foreign investors. Hardly. Most major businesses in Singapore are owned by government linked companies anyway.

2. Free textbooks for all students and cap school fees. How much does it cost? Buy one less submarine, one less F15. Help families raise and educate their children. Our future.

3. Hawker centres and wet markets are cornerstones of Singapore's DNA. Stop the ridiculous escalation of stall rentals. Buy them all back and cap rentals at $1000 (?) a month so that hawkers don't struggle to make a living and ordinary Singaporeans and their children can enjoy decent food with decent portions at decent prices again. And teh tarik doesn't taste like diluted flood water. Where to get the money to do the buyback? GST, casino taxes?

We have very good civil servants who can work out the details. Welfarism? No dole in involved; money is indirectly put back into pockets so families can afford to raise children. Face it, we are not having enough babies because the PAP's policies have made it difficult and expensive to do so. And all the other issues we have with foreigners, etc, flow from here.

We live in the 21st Century and should be able to do things better, faster, and cheaper. Lowering the ministers' pay is just step one. We need step two - repainting the economic landscape and lower costs for citizens - to put things right again. Do we have the political and moral courage to do that?

 

[Porfirio Rubirosa]

Today - Pay does not equate talent
Letter from Tan Si An 04:46 AM Jan 07, 2012

MANY of our most able statesmen were from academia, such as Minister Yaacob Ibrahim, Professor Tommy Koh and Professor S Jayakumar. As professors, would they command the salaries of the top 1,000 earners here?

Does that mean professors are not some of the smartest, most capable persons in our population? There is, therefore, no basis for using pay as a measure of talent.

Sixty per cent of our current Cabinet ministers were career civil servants before joining politics. Only Mr Gan Kim Yong has served as chief executive officer in the private sector. (Dr Vivian Balakrishnan was CEO of the Singapore General Hospital.)

Former ministers who left Cabinet last year are now not in any executive role in the private sector. Is it, therefore, appropriate to compare ministers to CEOs?

Successful businessmen-turned-politicians such as Mitt Romney and Michael Bloomberg in the United States are the kind of established talents we want to attract. Do they not face the same sacrifices, opportunity costs and loss of privacy as all politicians do?

Since they are independently wealthy, pay was unlikely to be a factor. How do you put a price tag on such talents?

A country is not a company, although Minister K Shanmugam once said that Singapore was a city, not a country. So it may be more appropriate to benchmark against mayors of alpha cities such as New York, London, Paris and Tokyo.

Members of Parliament Seah Kian Peng, Muhammad Faishal and Senior Minister of State Grace Fu mentioned that money is not a key factor, yet the latter two wondered if lesser pay would cause problems in attracting top talent into politics.

But this premise is also fallacious. MP Chen Show Mao is a fine counter example. He was a top corporate lawyer who gave up his career for public service, even though he has no chance of becoming a minister.

Other political parties also managed to attract scholar-calibre candidates for last year's General Election, even though they had faint chance of becoming MPs, much less ministers. Were they motivated by pay?