It is certainly good to see that there has been a healthy debate over the salaries and renumerations of Singapore’s ministers. If you have not kept up with the news, Jeremy Chen’s summary of the recommendation by the Ee Commission and various political parties is a useful read (see:http://newasiarepublic.com/?p=35616). Being transparent about salaries are computated (through a yearly independent commission) and checked (via an independent CPIB) were some of the other recommendations by the non parliamentary parties, on top of allowances for ministers, scrapping bonuses and delinking/restructuring the pay structure around GDP growth. Briefly, linking salaries and bonuses to the financial outcomes of the top 1,000 earners is contentious and not often a good idea The government frontbench may insist that this pay structure provides incentives for “talent” to join the government in order to raise GDP growth. But that’s not difficult to do – every country can boost GDP if the tools of government are manipulated to do so. Just look at Ireland. It’s also strangely flawed – what happens if the pay structure is in place like a depression hit country such as Ireland? The “incentives” to join the government will go right down with the computation in GDP growth as well.
Nevertheless, judging by the debates that have just concluded, there are clearly some excellent points brought up but some key ones ignored. In particular, Chen Show Mao and the WP’s recommendation that pay be pegged to MPs renumerations was stellar. Many PAP leaders and supporters have mocked the party for choosing a similar amount to pay the ministers, but their recommendation is fairly solid because it is based on important role MPs can play in the post-GE 2011 parliament. But more on this another time. Unfortunately, on the side of the PAP frontbench and backbench, there is much to be desired from transparency in governance. There was no talk about instituting more transparency into an already hated model – the process by which the new model was determined was sadly not as transparent as we needed it to be. Instead, more emphasis was given to defending the model by providing flawed comparisons with other countries, and much more rhetoric. More below.
Pay: Here and Abroad
“This is an open and transparent system, but it also has a serious downside. Whenever comparisons are made, they are usually based only on cash income. This makes the salaries of the leaders in other countries look a lot smaller than what they actually are, as it excludes the cost of the benefits and perks that their leaders enjoy, some of which are not even known or measurable.” – DPM Teo Chee Hean (Source: http://www.todayonline.com/Singapore/EDC120116-0000167/Process-to-determine-political-pay-must-be-open-and-transparent)
“The (US) president is paid less than me, yes,” Lee said during a debate in parliament Tuesday.
“But the high level residents in the White House travel in Air Force One, live in the White House and vacation in Camp David,” he said. (Source: Yahoo News: http://sg.news.yahoo.com/singapore-pm-says-obama-earns-less-perks-171326875.html)
Let’s examine the arguments made by both Lee and Teo above. It is true that ministerial salaries in these countries do not account for the various claimable expenses that are often accummulated by members of the government. There is no denying proponents of the clean wage model of these downsides because wages of other world leaders do not include other things such as his security and transport allowance. I’d note that there are two issues here – the clean wage structure is far from being fully transparent because ministerial renumerations are not accompanied by public disclosure of assets and spending, and it is a fallacy to compare how much leaders of many developed countries because there are differences in terms of context, geography and scope. Although parties and public intellectuals have advocated adopting the principles behind fixing renumerations to public spritedness, we certainly do not need to copy the mistakes of policymakers in these countries when advocating for more accountable and transparent renumerations.
A lump sum payment or clean salary approach may be transparent when the government is upfront and not embarrased to reveal how much they earn, but it is not accompanied by official public declarations of their wealth and expensess. As such, such an appoach is less effective in instilling public accountability for government officials because they tend to regard that huge pay package as “private propety” to do as they please. We still do not know how much they earn and what they own because this is not publically declared. It is best to be fully accountable and transparent whether there is a clean wage or an expenses based approach, because it informs parliament and the general public that their money is spent to sustain a reasonable life for the Minister and his family, instead of being squandered or used for other means. Much needs to be done in the Singapore context because there are too many ambiguities when it come to expenses incurred within salaries and outside of them. While expenses may be higher than the overall pay our ministers’ receive, you will find in many places that renumerations are still subject to parliamentary and subsequently public scrutiny.
As for examples, looking to the Australia, UK and US as a comparison between how much everyone gets is flawed on several levels. Admittedly the expenses scandal in the Commons was a huge political failure in the UK – not just because they had milked the system, but they had not been transparent with expenses thanks to a lack of concrete rules or legislation. In the US, there’s no doubting that the President travels on the taxpayers’ expense on Air Force One. Vikram Nair also brought up a valid point about Australia and the PM’s two residences being an expense to the taxpayers. Nevertheless, it may only explain expenses in the geographical context of these countries. Firstly, comparisons based on countries of these sizes or scope is spurious – we are not the size of Australia, UK and the US, and we should see no need to pay out expenses for more than one house, or travel expenses across the country. Generalizing the downside of expenses based on one or two cases as it is less valid than a comparison encompassing a range of better managed places, in particular, the Nordic countries and New Zealand. We should not forget to ground our recommendations in simple geographical facts, and we can do better than some of these countries (such as the UK) by developing legislation to curb expenses fraud.
Transparency and moving away from “Clean Wages”
Former NMP Siew Kum Hong recently suggested that a minister’s salary should be sufficient enough to maintain a reasonable lifestyle. i.e.: “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.” The idea here is that such a salary should be politically defensible. If a simple clean wage model adopted here, it still may not reveal the above facts. The lump sum payment system today still conceals purchases for which we are indirectly paying for. We will only know whether the salary is enough or too much when the minister declares his assets as well as his expenses (i keep emphasizing this point because it is very important). Regardless of approach, further transparency is key. The public must know about what each officeholder is spending and what he or she owns.It should be the basic legal requirement for all cabinet ministers to declare all their assests and expenditures. The clearer it is, the better. Furthermore, the public should recognize that there are some costs for government, but when assets and expenditures are clearer, members of the public can then fully appreciate the real debate begin about how much they should really be paid in terms of wages and/or expenses.
As i have said, transparency can be applied in either a clean wage context or a wage+ claimable expenses context, but i favour the latter for reasons of (1) greater accountability and reminding the leaders of their roles as public servants, not executives of a corporation, and (2) that it instills discipline and financial prudence for the claimaint. The ideal context for such a wage model to be applied here is when the Corrupt Practices Investigation Bureau becomes an independent watchdog, and when the role of parliament has been shifted from being a minimal legislature to an active one – but more on these another time. Claimants and their constituents know that there are clear and set limits for what they can claim for – spend over the limit and you can expect a debate as well as a bill to settle the excesses for yourself. Expenses should be paid for by the state when a minister conducts official duties, be it a trade visit to China or even a trip within the country. Once again, high internal travel and rent claims for a second home is extremely applicable in larger countries, but it is not in Singapore because of our geographical size. Now let’s be clear here – this doesn’t mean that we don’t pay the members of the government well – after the Prime Minister approves the spending, ministers should claim for these later and declare them fully. All you need to do is to define the guidelines. Even the UK (with a non-codified constitution) has a cabinet manual outlining the behaviours of ministers.
Now it may seem tedious to specify exactly what a minister can or cannot claim for, but setting clear rules and restrictions keeps office holders mindful that they have a role to fulfuil, but also, committees have to be mindful that they have a life to live. The above can also be achieved by setting salary at a lower percentage as a take home component, as well an expense limit for ministers. While i agree with Kum Hong that 1. expenses for one house is sufficient (ADD: and they have to pay for other properties they own out of their own pocket or sell them if they can’t afford the payment), i differ from Kum Hong’s in the following aspects when proposing expenses limits.
For example:
2. Ministers should only be able to claim for 1 official car (with petrol and driver allowance clearly set)
The whole idea here is that the minister and his/her family have to pay for the second or additional cars – you cannot claim for more than one because it is highly likely that the subsequent cars will not be used for official duties
3. Reasonable overseas travel expenses for official duties ONLY
When i say reasonable, i don’t mean Tiger Airways but i don’t mean the First Class cabin and the Silverkris lounge as well – probably Business class and a set limit for limosine travel
4. Reasonable food and beverage expenses during official duties (calculated per month)
Once again, it doesn’t matter if it’s Peach Garden or the foodcourt – the point here is that they should be able to eat but well within set budgets.
5. Healthcare Benefits
Treatment at government owned hospital, part-contribution with the Minister’s medisave at most times and emergency medical treatment subject to approval by the Prime Minister.
6. Security allowance
We cannot be clear on whether this is covered by the respective ministries/security forces or whether this is a component of the current clean wage system due to the lack of transparency. Nevertheless, to increase transparency, claims for security should be very clearly spelt out in the guidelines.
6. Declaration of the claims above per budget year (April to April) to be posted in the Government Gazette.
7. Declaration of assets per budget year (April to April) to be posted in the Government Gazette.
Anything else that isn’t indicated here should come out of the official salary – and if we take a figure of around S$400K per minister, it may be more than enough to buy your own car, finance your children’s education, and leave some money for retirement. After all, your children are not civil servants and your retirement has nothing to do with the state (especially when pensions are now being discontinued)
Lastly…
Something else caught my eye during the recent salary debates. I believe that some MPs (in particular Teo Chee Hean) as well as independent commentators such as Siew Kum Hong have spoken about salaries that “should be sufficient for a “reasonable lifestyle” for the family. What will be reasonable then, if the family has more than one breadwinner to share the burden of providing for the family? Moving away from transparency for a moment, I am surprised that this point has been missed entirely, because the arguments made in favour of maintaining this pay structure (and hence maintaining a certain standard of living) ignores the fact that many people who are attracted to political office have partners who are working, and hence able to bring in some income so as to “maintain a reasonable lifestyle and retirement”. Prominent examples i can think of are Tony and Cherie Blair (the latter continued her work as a lawyer when her husband was PM), Chancellor Merkel and her husband Joachim Sauer (who is a professor of quantum chemistry at Humbolt University Berlin) and even former Australiam PM Kevin Rudd and his entrepreuner wife Therese Rein. Let’s not forget Lee Hsien Loong and Ho Ching. I am sure there are many more examples of politicians in Singapore and elsewhere with very successful high income partners, but the point here is, many ministers don’t often have to go it alone in providing for a “sufficient lifestyle”. I suppose no one should bring this up as an excuse factor for benchmarking pay to the top income earners in order to entice people to enter the public service.
