Salary Components of Prime Minister and Ministers

1 Mr Alex Yam asked the Prime Minister whether he can (i) list all the components of the salaries of the Ministers and Prime Minister (ii) state the amounts, in months of salary, paid for each component for each year from 2013 to 2017 and (iii) confirm that these components are fully included in the Ministerial salary benchmark established in the White Paper on "Salaries for a Capable and Committed Government" that was debated in Parliament in January 2012 and are not payments over and above the salary benchmark.

The Deputy Prime Minister and Coordinating Minister for National Security (Mr Teo Chee Hean) (for the Prime Minister): Mr Speaker, Sir, the salary structure for Political Office Holders is clearly and transparently set out in the 2012 White Paper on "Salaries for a Capable and Committed Government", submitted by an independent Committee after extensive consultation with members of the public and Members of Parliament.

The Committee had received more than 500 emails and letters from Members of Parliament and the public, including young people, CEOs, SME owners, retirees, overseas Singaporeans, professionals, academics, as well as representatives from Non-Government Organisations. So, there was extensive public consultation.

With your permission, Mr Speaker, Sir, may I display some slides on the LED screen.

Mr Speaker: Please do.

Mr Teo Chee Hean: Thank you. The Committee set out to first determine what the appropriate level of total annual salary should be.

In 2012, the Committee recommended a norm level of $1.1 million as the total annual salary for an entry level MR4 Minister, based on a 40% discount to the market reference, to reflect the ethos of public service. The Committee then recommended how this total amount should be divided between fixed pay and variable pay. So, that was the next step.

The fixed pay comprises the monthly salary and 13th month Non-Pensionable Annual Allowance. The Committee recommended that a significant part of the total annual salary should be variable, and the quantum linked to individual performance and national outcomes. The variable components of the annual salary comprise individual Performance Bonus, National Bonus and the Annual Variable Component. And together these variable components constitute 35% of the total norm annual pay, and this is quite usual for executives and senior people at this level. The fixed pay is 65% of total norm annual pay.

All the components added up – fixed pay plus variable pay, including any and all bonuses – make up the norm level of $1.1 million for an entry level MR4 Minister.

I underline this point, Mr Speaker, all the bonus components form part of, and are not in addition to, the $1.1 million salary norm.

The salary structure is totally transparent. There are no hidden salary components or perks. The Prime Minister’s salary does not have an individual Performance Bonus as there is no individual who can assess his performance. But to keep to the principle of making a significant part of the Prime Minister’s total pay subject to performance, that is, 35%, the Prime Minister’s variable pay has twice the National Bonus compared to other Ministers, linking it to national outcomes, in place of the individual Performance Bonus.

The independent Committee recommended that the Prime Minister’s total norm annual salary should be two times that of an entry level MR4 Minister, that is, $2.2 million. Again, this includes all components, including his National Bonus, and there are no salary components or perks beyond this.

I have prepared a handout on the range and average of each of the variable pay components received by Political Office Holders over the past five years.

Mr Speaker, Sir, may I ask the Clerk to distribute the handout, please.

Mr Speaker: Please proceed. [Handout was distributed to hon Members.]

Mr Teo Chee Hean: If Members can refer to the handout, (Annex 1) reflects the actual variable pay components received by Political Office Holders over the past five years.

Between 2013 and 2017, for the National Bonus the range was between 3.4 and 4.9 months, with the average over the five years being 4.1 months; for Performance Bonus the range was from three to six months each year, with the average across all the Political Office Holders over five years at 4.3 months; for the Annual Variable Component, the range was 0.95 to 1.5 months over the period and the average over the five years was 1.3 months.

All these variable components are in accordance with the framework I earlier described, and not on top of it. The bonuses can be higher than the norm in the framework, or lower, depending on the actual performance of individual Political Office Holders and the national outcomes in each year.

The National Bonus is determined equally by the four national indicators laid out in the White Paper: namely, the real median income growth rate of Singaporeans; the real growth rate of the lowest 20^th percentile income of Singaporeans; the unemployment rate of Singaporeans; and the real GDP growth rate.

The Annual Variable Component is always the same amount that all Civil Servants receive.

The Performance Bonus is determined by the Prime Minister who consults the senior ministers in Cabinet in assessing the performance of Political Office Holders.

In determining the Performance Bonus for each individual, he takes into account the actual work that each Political Office Holder does in the specific responsibilities assigned to him, as well as his contributions in Cabinet when we consider broader national issues.

Many Political Office Holders hold more than one portfolio, in order to stretch them and to build depth and experience in the Cabinet.

But I should emphasise that each Office Holder receives only one salary regardless of whether he holds one or multiple portfolios.

Emeritus Senior Minister Goh Chok Tong is not a member of the Cabinet, and has not received a ministerial salary since he retired from the Cabinet in May 2011.

Mr Speaker, Sir, the Government has always been transparent with the salary structure for Political Office Holders. The 2012 White Paper on "Salaries for a Capable and Committed Government", was submitted by an independent Committee after extensive consultation with Members of Parliament and the public. The paper was endorsed in full in January 2012, after a thorough debate in this House over two and a half days with 29 Members speaking on the matter, including seven Members from the Opposition.

In determining the salary framework, the Committee was guided by the following three key principles:

First, salaries must be competitive so that people of the right calibre are not deterred from stepping forward to lead the country;

Second, the ethos of political service entails making sacrifices and hence there should be a discount of 40% in the pay formula; and

Third, there should be a "clean wage" with no hidden perks.

Members of Parliament, including those from the Workers’ Party, endorsed these principles.

I quote Mr Chen Show Mao – he is in the House, "We (the Workers' Party) agree with the three principles that political salaries should be competitive, that political service is a calling that has its own ethos and their wages should be transparent." During that parliamentary session, the Workers' Party had proposed their own formula based on these same principles.

Mr Speaker, Sir, could I request the Clerk to distribute Handouts 2 and 3 .

Mr Speaker: Please do. [Handouts were distributed to hon Members.]

Mr Teo Chee Hean: Handout 2 (Annex 2) is a Straits Times report on the 2012 debate in Parliament. The handout provides a succinct summary of the key points and conveys a flavour of the debate.

It reports that there was, I quote, "Real progress in [the] ministerial pay debate", and quoting my remarks that the "Opposition’s agreement on key points marks a breakthrough", and the "Shift in the WP's stance helps debate move forward".

Mr Speaker, Sir, there was convergence in this House on both the principles as well as the quantum for Ministers' salaries.

If Members could refer to Handout 3 (Annex 3), the formula put forward by the Workers'Party in 2012 would have resulted in essentially the same total annual salary level for the MR 4 entry level Minister as that recommended by the independent Committee.

But the Workers' Party formula would have had a higher level of fixed component of 81%, amounting to roughly $800,800, compared to the White Paper's proposal and a smaller variable component of 19%.

And this means that the WP would have paid out a higher portion of the salary – about $880,000 out of $1.1 million – regardless of individual performance or national outcomes, and even if the outcomes were not achieved.

This would have made the link between salary and performance weaker, though both the WP's and the White Paper’s proposals would have added up to the same norm annual salary.

Mr Speaker, Sir, we recently carried out a second independent review of the salary structure and level.

At the Committee of Supply (COS) debate this year, I informed this House that the Prime Minister had formed a new independent Committee in 2017 to review the salary framework to ensure that it remains appropriate and valid. The 2017 Committee reaffirmed the three key principles and was of the view that the current salary structure for Political Office Holders remained relevant and sound.

Though the MR4 benchmark had increased by 9% since 2011, the Government decided to maintain the current salary structure and keep salary at the 2012 level. Significantly, no member of the Opposition sought clarification on my COS statement.

Mr Speaker, Sir, I have answered all three parts of Mr Alex Yam’s question. Mr Leon Perera has also filed a similar Parliamentary Question for Written Answer on Ministerial Salaries, which I believe Table 1 in my handout answers. Before I proceed to the concluding segment of my reply, with your permission, Mr Speaker, Sir, I would like to invite Members, in particular Mr Perera, to seek any clarifications that they may have.

Mr Speaker: Mr Alex Yam.

Mr Alex Yam (Marsiling-Yew Tee): Mr Speaker, I thank the Deputy Prime Minister for a very comprehensive reply. Just two very quick supplementary questions. One, since the revision in 2012, in percentage terms, has the average income of our Ministers increased or decreased? And secondly, on the issue of pensions, which has also appeared in the public discourse, can the Deputy Prime Minister clarify once and for all, how many Political Office Holders still qualify for pension?

Mr Teo Chee Hean: Mr Speaker, Sir, I can confirm that the pay for Ministers currently remains the same, in accordance with the 2012 White Paper framework. Of course, it can go up and it can go down, depending on whether the National Outcomes were achieved and the individual performance of the Ministers. And that is, essentially, part of the structure of the framework that was put in place in 2012.

And I can confirm to Mr Alex Yam that Ministerial pensions were discontinued in 2012, as part of the revision of the framework, and that Ministers receive the same MediSave contributions, percentages and numbers, as Civil Servants do, under the MSO Scheme for medical benefits. So, there are no hidden perks, no hidden medical benefits. There are no pensions.

Mr Speaker: Mr Pritam Singh.

Mr Pritam Singh (Aljunied): I thank the Deputy Prime Minister for his reply to Mr Alex Yam's question. The Deputy Prime Minister stated that the three components of Mr Alex Yam's question had been answered. The second part actually requests the Prime Minister to state the amounts in months of salary paid for the year from 2013 to 2017. What we have in the first handout is a range in the number of months. Do we have details on the absolute dollar amount that was requested in the Parliamentary Question (PQ) by Mr Alex Yam?

The second question I have is with regard to whether the Deputy Prime Minister agrees that in response to Mr Leon Perera's PQ filed on 10 September, whether the Government could have pre-empted some of the misinformation that occured online, had a fuller and more expansive reply been given to Mr Leon Perera in September.

Mr Teo Chee Hean: Mr Speaker, Sir, I think I have answered Mr Alex Yam's question as he has posed it. And the most important aspect of that answer is that all the components are within the framework of $1.1 million that was put in place since 2012. That is the most important.

I should point out that Mr Leon Perera asked the question for a Written Answer and his question was fully answered in the written form. Had Mr Leon Perera chosen to ask an Oral question, he could have expanded, he could have asked, but he chose not to. And I invite him to ask any questions for clarifications that he may have. And of course, Mr Pritam Singh, as well, who was present during the debate.

Mr Speaker: Mr Leon Perera.

Mr Leon Perera (Non-Constituency Member): I thank the Deputy Prime Minister for his detailed reply. Just a few supplementary questions. Firstly, would the hon Deputy Prime Minister acknowledge that my original written PQ filed in September asked for total Bonus Months and not only Performance Bonus? Would that not have been an opportunity to, at that point, when the written PQ was answered, and also disclose and publish the National Bonus level, in addition to the Performance Bonus level, which I think was the point that Mr Pritam Singh was making. So, that is my first question.

My second question would be: would the Government be publishing the quantums of National Bonus and average highest and lowest Performance Bonus on an annual basis, going forward?

Mr Teo Chee Hean: Mr Speaker, Sir, he asked for what each Minister gets. For the National Bonus and the AVC, it is the same for all Ministers. The AVC is well-known. So, if that was what Mr Leon Perera wanted, he could have filed an Oral question and he could have followed up, and we would have provided him the answer, as we would today. So, there is nothing secret about it. It is transparent. It is open. And I am answering all the questions today.

But could I ask Mr Perera, whether he agrees that Minister's salaries should be competitive, that the salary should recognise the ethos of public service and that salaries should be transparent, which was the Workers' Party's position in 2012?

Mr Leon Perera: I thank the hon Deputy Prime Minister for his reply. My PQ did not raise a suggestion with relation to the salary, the formulation for calculating the total compensation of the salary, and I have no disagreement with those broad principles, in response to the Deputy Prime Minister's question.

I would also like to pose a question in relation to my original Written question filed in September. It was in relation to total Bonus Months. And I would like to ask the hon Deputy Prime Minister has the figure for the National Bonus – which I acknowledge is the same for all Ministers – has that figure been previously published prior to when the Written question was filed in September. If not, then, would that not have been an opportunity to also release that figure in September together with the average Performance Bonus figure.

Mr Teo Chee Hean: Mr Speaker, Sir, we did publish the full information, once in the first year after the framework was announced. It is in the public records. And in fact, the method of calculating the National Bonus is well-known. All the components are there. All the factors are there. And it can be calculated. And I think people have made an attempt to do so; not very far off from where it actually was.

But I take it that Mr Leon Perera does affirm that he agrees that Ministerial salary should be competitive, that the salary should recognise the ethos of public service and that salaries should be transparent. Can I ask Mr Perera whether he agrees that the salary proposals that the Workers' Party had put forward in 2012 would essentially result in the same total annual salaries for Ministers as the White Paper, except for the Workers' Party's proposal having a much larger component of fixed pay?

Mr Leon Perera: For the Deputy Prime Minister's question, I was not present in the House. I did not participate in this debate and in my PQ, I did not make a suggestion or a new suggestion about how the total compensation or the monthly salary should be calculated.

Mr Teo Chee Hean: Mr Perera should not evade the question. I have provided him all the information there. It is there. Does he agree or not?

Mr Leon Perera: I think with the assumption that this information is descriptive in nature, then, clearly, there is no grounds for me to disagree that it is a description of what had been presented during the debate in 2012 which I did not participate in.

Mr Speaker: Mr Pritam Singh.

Mr Pritam Singh: Thank you, Mr Speaker. Sir, the answer is yes. We agree. The Ministerial salaries 2012 White Paper versus Workers' Party's formula table that the Deputy Prime Minister had shared with the House, is accurate.

There is one point which I have to make which is an important distinction even though the result is similar, is the basis upon which the monthly component is calculated. And that was a question of principle. The principle that the Workers' Party took upon itself was to consider what would be a fair multiple, what sort of message do you send to the public, with regard to appropriate salary that ultimately is derived. We chose MX9 as the point, because we felt that an entry-level Civil Servant would aspire to that position, and he would not have to be a scholar or anything of that sort. That is our political prespective at that time. The Government's perspective is to take the 1,000 top earners and then, you take a percentage of their total salary, and then give a discount of 40% or something of that nature.

So, that is the key difference. But the total amount as it is accurately in the table, is correct.

The second point I would like to suggest – and this is not belabouring the issue, Mr Speaker – is the question again by Mr Alex Yam about the amount. I believe, in the context of the Select Committee on Deliberate Online Falsehoods that came out with a list of recommendations, it is actually more propitious for us to present all the information in an easy-to-understand manner for the public. And that would reduce the prospect of misinformation online.

I understand there is an issue with regard to Performance Bonus. A range would be sufficient. It does not need to specify what each Minister gets. But I would like to read Recommendation 9 which would be a helpful way for the Government to move forward. Recommendation 9 of the Select Committee's Report states that "Public institutions should wherever possible provide information to the public in response to online falsehoods in a timely manner. They should also seek to pre-empt vulnerabilities and put out information in advance where appropriate to inoculate the public. They should ensure that they communicate with the public in clear and comprehensible terms."

I do understand that "Factually", the Government website, put out a response to certain misinformation that was generated by Mr Leon Perera's question. His question came out on 10 September; on 11 September, certain websites got carried away with certain information or the way they interpreted that reply. And on 16 September "Factually" presents the components as the Deputy Prime Minister did. But I would suggest to the Deputy Prime Minister that if we put out the dollar value, the prospect of more misinformation can be reduced.

Mr Teo Chee Hean: Mr Speaker, Sir, I think Mr Pritam Singh is being slightly disingenuous. I mean, Mr Perera asked for some data. And the next day, the data was misinterpreted and became the widespread basis for false information. I am delighted that Mr Pritam Singh and the Workers' Party are all for transparency and for debunking falsehoods.

So, perhaps, Mr Speaker, Sir, allow me to clarify the position and I hope that the Workers' Party will help us to clarify the position by putting it on your website also, especially as Mr Pritam Singh has agreed.

So, the key facts are these: first, all salary components, including the Variable Pay, are part of the salary structure benchmarked in 2012 at $1.1 million for an entry level Minister at MR4. There are no components beyond that.

Second, the salary structure and benchmark have not changed since 2012. I reported to Parliament earlier this year that the Government had decided not to adjust salaries even though the MR4 benchmark had increased by 9%.

Third, in 2012, there was remarkable convergence in this House on the matter of Ministers' salaries. Mr Pritam Singh has just said that the Workers' Party agrees with the principles underlying the current salary structure and that the Workers' Party's alternative formula used a norm salary level that is also $1.1 million.

The proposals, Mr Speaker, Sir, are really very close to each other – in principle and in quantum.

Indeed, Mr Speaker, Sir, if there were a Workers' Party government in power today, by their own formula, the Workers' Party Minister would be paid essentially the same as what a Minister today is paid. Mr Pritam Singh would pay himself that same amount.

The subject of Ministers' salaries, Mr Speaker, Sir, is a difficult one to talk about. It is an emotional one. There are misconceptions, sometimes deliberately propagated. It is easily politicised.

Even knowledgeable, well-meaning people, who have a deep interest in politics are susceptible to this.

I read Mr Ho Kwon Ping's extensive interview with CNA, which was published yesterday.

Among other things, he suggested pegging Ministerial salaries to the median salary of Singaporeans. He also suggested an independent Commission to decide the actual quantum. And Mr Louis Ng, in an earlier similar interview, also suggested that there should be public consultations.

Sir, from my reply today, Members can see that there was an independent Committee, not one but two. The independent Committee did have extensive consultations in 2012 and a significant part of Ministers' salaries are pegged not just to the growth of average salaries, but to the lowest 20^th percentile of salaries, and to unemployment rate – issues which are important to every Singaporean.

But even Mr Ho, who is well-informed and has a deep interest in politics, has some serious misconceptions. He claimed, for example, that his salary is lower than the Ministers.

Sir, fortunately, the interviewer had checked, done the homework, and pointed out to Mr Ho that his salary, including benefits and bonus – I would not mention the figure, but it is significantly higher than that of Ministers and certainly not lower than Minister's salaries, to quote the article.

Sir, otherwise the misrepresentation would have been carried widely and spread more disinformation.

Sir, Ministers, for example, are responsible for tourism development or air transport as just one of their many responsibilities, which contribute to the growth of the tourism industry in our region, in which Mr Ho's company operates.

Mr Speaker, Sir, so if this is a difficult subject to talk about, why do we have to talk about this subject from time to time?

Because, Sir, we need a fair, open, honest, transparent framework in place, so that we can continue to have able, committed and passionate people, with integrity, come to serve as our political leaders.

Sir, I am 64 this year, and have served more than 25 years in politics. My most important task now is to help Prime Minister Lee to prepare, not just the Fourth Generation leadership, but also to make sure that we are able to have a Fifth Generation of leaders coming in, having the time to learn, to be tested, and to gain the trust and support of Singaporeans.

These are people in their late 30s and 40s. Many would be at the threshold, where they have a good chance of reaching the peak in their chosen careers and professions.

Sir, the virtues of passion to serve the people is shared by Members from both sides of the House. The PAP looks for people with integrity, who are capable, committed and caring, who are prepared to put others before themselves.

All Members of this House know that coming into politics entails many sacrifices, in privacy, continuous exposure to the glare of the public eye in their careers, in their careers, in family time, not always being there to watch your kids grow.

Sir, Ministers' salaries have been studied and recommended by an independent Committee. They are fair-minded people, who have the interest of Singapore and Singaporeans at heart. They have recommended a framework and a quantum that reflects all these things that we talk about – sacrifice, commitment to service, working for the good of our fellow Singaporeans. All these factors are in there.

The Government accepts the recommendations.

The Workers' Party accepts the principles and has come up with essentially the same quantum, which Mr Pritam Singh and Mr Leon Perera just affirmed.

So, let us agree to agree. This is what politics is about also – not just opposing for the sake of opposing. This is a matter which, whether one is in the opposition or in government, we can agree upon – that we need a fair framework to bring in the best team, to do the best for Singapore and Singaporeans.