Mr Speaker, Sir, the issue of Ministers' salaries has been discussed many times in this House. In December 1993, I announced here civil service salary revisions (including Ministers). We established the principle that salaries would be set against private sector benchmarks, which means comparable jobs, comparable qualifications, for two reasons. Firstly, because that is the alternative which is open to the civil servants and Ministers whom we are targeting. If he does not come into the civil service, if he does not become a political appointment holder, what does he become - banker, lawyer, accountant. That alternative path is what we must compare against. Secondly, that is the group which we are targeting. Those are the men and women we want in the Government and as political leaders. Mr Jeyaretnam compared the PM's salary with the average monthly wage. It is not relevant. He did not compare the lawyers' salaries with the average monthly wage. Why? He has a practice. Why do lawyers earn many times the average monthly wage? Because of the contribution which they make, the value added of their work makes it worthwhile for their clients, whether it is companies or individuals, to pay them and they earn their pay honestly. Why is our Prime Minister different? Not everyone who earns $2,000 a month, which was Mr Jeyaretnam's benchmark, is qualified to be a Prime Minister. For that matter, not every lawyer is qualified to be a High Court Judge, or the Attorney-General, or the Minister for Law. We are looking for special people for special jobs. And the basis of comparison must be what is the job worth and what is the man worth. What is the job worth means how important is the job, how much contribution can you make as a Minister, what is at stake when you make decisions, between the right decision and the wrong decision. Is it just a damaged printed circuit board or a bad housing project? Or is it the security of the country, the stability and prosperity of the economy and the livelihood of three million Singaporeans? Mr Jeyaretnam said only three million. I do not think we are so few or so unimportant. Secondly, what is the man worth? How much can he earn? How much would he be worth in a different job in the private sector? We want that man. How do we make it not too much of a sacrifice for him to do our job? Following the salary revisions in December 1993, the following year in October 1994, the Government published the White Paper - Competitive Salaries for Competent and Honest Government. The White Paper formalised two salary benchmarks for comparing the public sector with the private sector. Firstly, at the top, Staff Grade I in the civil service which is the senior Permanent Secretary pegged to 60% of the average of the top four people in six professions - bankers, accountants, engineers, lawyers, local manufacturers, MNCs. And in the long term, we said we would go to two-thirds rather than 60% of what these 24 people earned. Secondly, we have the benchmark for the middle level officers because this is a group which is pursuing their careers and very anxious about making sure that they are not left behind by any of their peers and contemporaries. So we pegged Superscale G, which is where a promising young officer should reach by the age of 32, to the 15th highest earner of that age cohort in those six professions. We fixed the civil service top and middle points, and we pegged the Ministers to Staff Grade I. And the rationale is the importance of the Minister's job, because the Permanent Secretary runs the Ministry, and the Minister supervises the Permanent Secretary, he does not just preside. And his responsibilities and functions are at least as demanding as that of a senior Permanent Secretary. In Singapore, the Minister does not just preside. He runs his Ministry and masters his portfolio. At the same time, he has to carry his political duties, present policies to the public, carry the ground, help the Prime Minister to lead the country. There is no mystery about what Ministers do. In fact, it was in the White Paper on page 8, if I read the paragraph: "Persons fit to be Ministers and senior civil servants should be of a calibre who would rise to the top in the private sector. A Staff Grade I Administrative Officer occupies a key post. He may be the Permanent Secretary in a large Ministry like Defence, Finance or National Development. He will often in addition be responsible for a statutory board, a major government-linked company, or other demanding projects. He carries a far heavier responsibility than a typical top private sector professional. A Minister has an even heavier responsibility than a Staff Grade I Permanent Secretary. Setting Ministers' salaries starting at Staff Grade I, with a range of grades above this to cater for the range of Ministerial jobs, is conservative." So we pegged the Permanent Secretaries, we put the Ministers on par with them and we set the Prime Minister's salary at about twice Staff Grade I. And in between, there were the DPMs, the Senior Minister and the Chief Justice. Mr Jeyaretnam says it is wrong to compare the Prime Minster's job or a Minister's job with a multi-national CEO, and even if you compare, the CEO will be greater than the Minister. I ask Mr Jeyaretnam, take the Chairman of a bank and take the Minister for Finance. Does he seriously argue that the man running a bank is more important than the man running the whole finances for the whole country and the entire monetary system and financial system? If you mess up a bank, your shareholders lose their equity, your depositors lose their savings. If you mess up the country's finances, three million people lose their houses, their CPF deposits, their livelihoods and maybe their homes. So there is no comparison. We published the White Paper, we debated it here for four days - 31st October to 3rd November 1994. And after the debate, the House endorsed the White Paper as the basis for setting salaries of Ministers and senior officers. Mr Jeyaretnam says he wants to know what every Minister is worth, call a commission. The Prime Minister, in his speech moving this motion, debating the White Paper specifically addressed the issue of whether every Minister was worth exactly the amount he was paid in the public sector, and I quote him [Hansard, Vol. 63, No. 7, Col. 660]: "Ministers vary in their ability, and in their private sector earning power. But I have no doubt that more than half of my Cabinet would have been among the top 100 salary earners, had they opted for a private sector career. I cannot truthfully say that all Ministers will get what they are being paid if they were in the private sector. But in politics, I need a balanced team, to reflect the political realities in Singapore. Though a Minister may not earn the same amount in the private sector, I must be satisfied that his responsibilities and performance as a Minister, in particular, his political contribution, justify his being made a Minister. ." And the proof of that was seen in the last general election where the Opposition candidates very carefully avoided the constituencies which they thought were held by strong Ministers and targeted constituencies which they thought were held by weak Ministers and still lost. So the Ministers earned their pay. If Mr Jeyaretnam seriously did not know what the Senior Minister was doing in Cabinet, then he should have gone to Tanjong Pagar and told the voters there that the Senior Minister was not earning his pay and they should vote for him, and he would do better, or he should go to Marine Parade, as he tried to do in 1991, but chickened out in 1992 and did not go again in 1997. So that is the test of what the Ministers are worth. Can they carry the ground? Can they carry their policies? Can they supervise and lead their Ministries? At the end of the debate, the Prime Minister announced that he would submit his own pay, the benchmark for the Prime Minister, to be reviewed by an independent panel, which is what Mr Jeyaretnam has asked for. So we set up a panel. It comprised Michael Fam as Chairman, Fock Siew Wah, Michael Lim Choo San of Price Waterhouse, Lim Ho Kee of UBS, Sat Pal Khattar, a prominent lawyer. The panel sat and reported in January 1995. And it said in its report, I quote: "The Committee is therefore of the opinion that it is appropriate for the senior-most Minister (ie, the Prime Minister) to be paid twice the junior-most (ie, Staff Grade I) Minister. The Committee would even venture that using Ave 24 (1992) as representing the full market related salary of a Minister Staff Grade I, it would be entirely reasonable to pay the Prime Minister twice that, ie, approximately $2.4 million a year." This was in January 1995. The Government accepted the report. But the Prime Minister decided and announced that he would personally forgo any salary increase for himself, arising from the recommendations of the White Paper, for a period of five years. The following year, 1996 was a general election year. Everybody knew it. We knew that the Opposition would make Ministers' salaries an issue in the election. But we did not avoid the subject. We debated it openly, well before the election to make sure that it was fully discussed and everybody understood, and all arguments could be canvassed. In July last year, the NTUC invited the Senior Minister to talk to unionists. He gave a full exposition on this issue, answered questions, provided additional data, fully televised. All arguments were canvassed. Come the elections, we defused the issue. But we did not submerge it. Because, as expected, the opposition and especially the Workers' Party made the Minister's salaries an issue again. Mr Jeyaretnam himself raised it at least six times in 12 election rallies and in his final Party political broadcast on the eve of the election, he raised it again. He said, "Vote for us. We will raise this in Parliament." But except for one, all of the Workers' Party candidates lost, including Mr Jeyaretnam. So as Mr Chng Hee Kok said, the Government's policy on Ministers' salaries has been fully and democratically debated and decided. In Mr Jeyaretnam's words, it is judgement by the people. It is settled. The Government has a full mandate to implement it. And the system has now operated for three years. The first two years, the benchmarks went up in 1995, it went up 15%. In 1996, it went up another 10% because that was the way the private sector was moving. This year, 1997, they went down, 18%, as the market moved. But based on preliminary IRAS data for Year of Assessment 1997, which means for next year's adjustment, the benchmark will probably rise again next year. In terms of percentage of the benchmark, we have reached 60% of the Average 24 this year, and we have announced that we will continue and aim to reach two-thirds of the average over the next four years. The White Paper stated that we would review the benchmarks after five years, which means in 1999. This was the first time we were setting benchmarks and we were not sure how it would work out in practice. So far, it has worked well. Because we have a proper system all the way up to the top, paying according to the market. Therefore, we have been able to reward all public officers properly, not just a small number of Administrative Officers, but also teachers, clerks, technicians, SAF officers, and also police officers whose salaries are now being reviewed. These are the problems which we have not been able to solve for years, because the whole structure was wrong and frozen, except for the SAF which was on its own and had its own block vote, and its own freedom to operate. But since we have now fixed the top, the whole structure falls into place and the revisions we have made for the teachers, for the clerks. Without the revisions, we would not have a proper teaching service in Singapore. If we fail to pay Ministers properly because we are embarrassed about it politically, coy or unable to defend what we have done publicly here and outside, then the whole public service system is put out of joint, and the quality of the administration and of government must decline. Mr Jeyaretnam cited Britain. He did not cite the recent problems Mr Tony Blair has had in implementing an overdue pay rise for himself and his colleagues. Mr Blair said, "No, I will forgo it again." Because he wants pay restraint across the board and he feels embarrassed to take it, even though by any standards he is grossly underpaid. As a result, the whole British civil service is held down. Judges, etc, become underpaid, and it becomes difficult to recruit good men to maintain standards. Maybe with the British tradition of service, of landed gentry being able to do public service for free, it can continue for some time, but even they are finding difficulty operating that, and there is no Labour Party landed gentry. So the comparison with other countries which Mr Jeyaretnam gave is not really relevant. He said he compared only with developed countries. Why not include more? Some of the lowest paid Prime Ministers and Presidents in the world are also the wealthiest. Mr Marcos was one of them. Why not include him in your list? On developed countries, their Prime Ministers privately tell us that they envy us, our ability to be honest and open, and not be trapped in a political hypocrisy which they are locked into, with politicians looked down upon, unable to attract better quality, therefore, unable to raise their standing and justify a pay rise, a vicious circle. Mr Jeyaretnam quoted the US President, saying about his allowances he knows not. Let me ask Mr Jeyaretnam whether he knows of the White House and the Lincoln Bedroom, Air Force One, Camp David, the best medical care in the world, and all the perquisites of being the most powerful man on earth. When Ronald Reagan retired as President, he went to Japan on a promotion trip for one company. Before he went, he was given an advance fee of US$5 million. Do you want that system in Singapore? It is a revolving door, not just the President, but everybody below him. Mr Reagan had a public affairs consultant, Mike Deaver. He left before Reagan's term expired, because his currency would expire when Reagan's term expired. And he wanted to make sure he cashed in and made his money out of his contacts and his connections before the election and his friends were out of place. We considered hiring him because we wanted to lobby on some issue, and they told me he was the hottest property in Washington - $200,000. I said, "No, no, why not you tell him, if he succeeds, I'll pay him half a million. If he doesn't, zero." They said, "No, no, you can't bargain, because he is such a hot property. You either take it or leave it?" I said, "Leave it." But many other people took him. The Canadians employed him, the Koreans employed him, and he made a good living in the time before the next Presidential election. Do we want that system? The Australians, again, Mr Jeyaretnam says allowances he knows not. Has he heard of Australian travel allowances? There is a scandal. Three Ministers have resigned because they fiddled with their travel allowances which are tax free. One opposition frontbench attempted suicide with a servile apology for letting down the people. He had claimed $300 a night. He was supposed to be out station. He went home to sleep in his mother's house. Is corruption not a problem? Sleaze is a problem with every society where this issue is not honestly confronted and openly acknowledged. Is that system better than ours? Since we instituted the benchmark, there have been no signs of public sector pay outstripping the private sector. The benchmark compares with only six professions. But in the private sector, there are many other professions. So we really need to look not just at these six but also at how people in other professions are earning. It is not strictly comparable but not completely irrelevant. When we wrote the White Paper, we envisaged that the Staff Grade I (60% of Staff Grade I) would rank 134 among the private sector. And we argued that any Minister worth his salt should rank higher than 134. But based on the latest figures we have, which is last year's, Staff Grade I at 60% ranks only 280. In other words, among these six professions, we have maintained our position, but there are many other professions moving ahead in much larger numbers, and relative to them, we are losing some ground. This is the relevant comparison - a potential Staff Grade I Permanent Secretary or Minister cannot become the President of the US, but he can easily be one of these 280 people earning more than him. And if he cannot, then he should not be a Permanent Secretary or a Minister. Most important of all is the quality of men in Government, and the quality of the government as a whole. Nobody enters politics in Singapore for the pay, because even with the market-based salaries, we are still at a discount to the private sector. But the financial sacrifice cannot be too great. Otherwise, many able men and women will be deterred from entering politics. Competitive salaries have helped us to attract and retain good men and women into the civil service and Government, and to govern Singapore well. Sure, we can pay much less and we will still have MPs and Ministers. At every price, some people will queue up for the job. But will they be the same quality? Will they be the people we really want to become MPs and Ministers? Even the opposition finds it difficult to get able, honourable men to stand. You take Mr Chiam, formerly of the SDP, and his problems with Dr Chee Soon Juan. You take the WP which in the 1970s twice fielded Mr Wu Kher, who was a bicycle thief, and in 1991, fielded Mr Zeng Guoyuan, a Chinese physician and acupuncturist, who was subsequently convicted for molesting a woman patient. And even in 1997, it had a candidate with a criminal record. How can such people, or such political parties, raise the standard of politics in Singapore? Even with honourable men, if they are well-intentioned but not up to the rigorous demands of running the country, we will quickly run into problems, never mind dishonourable men. If we want good people in Government, then we have to pay them properly. Mr Jeyaretnam talks about sense of proportion. What is the proportion? $15-$20 million for the pay of all the political appointment holders versus $130,000,000 for the GDP this year, 0.01% of the GDP for the top management? Is that out of proportion? Every unionist knows that when his members look for a job, he does not look for the company with the cheapest CEO. He looks for the company which is the best run, which is most successful and profitable, so that it can pay him good wages and offer him a rewarding job. That depends on having a strong CEO and a good management team, properly paid what they are worth. And I think running a country is the same. You do not volunteer to be a citizen of a country with the cheapest Prime Minister or President, not even Mr Jeyaretnam. Mr Jeyaretnam said our Ministers face very few problems. The worth of the Government is measured not just by the achievements which you can see, but also by the disasters which are silently avoided. Because I am now doing the financial sector review, I have been meeting bankers. One American I met recently, an expert on futures, congratulated me on how we had kept BCCI out of Singapore. He was in Chicago, where the Chicago Board of Trade (CBOT) had admitted BCCI into the Chicago futures market. But after a year, they found that BCCI was making suspiciously large trades, putting on big contracts one day billions of dollars, taking it off the next, and they could not figure out why and they could not figure out where the money came from. So they withdrew BCCI's licence. Lucky for them. This banker was in Hong Kong when BCCI collapsed. For three days, there were riots, as depositors who had lost their life savings scrambled to recover their funds. It never occurred to him that in Singapore there was no problem at all, because Singapore had gone one better than Chicago, and never let the scoundrels in. It is not that BCCI did not try to get into Singapore. They lobbied repeatedly, at the highest levels through the most powerful channels. The American banker said that whoever resisted the pressure to admit BCCI deserved a commendation. And this was MAS, which means Koh Beng Seng who stood firm, and the Ministers who backed MAS. What is it worth for us to have the right people in charge of our monetary system, so that we avoid one BCCI? Is it worth? You can get a committee to study this. We cannot solve this sort of problems by having MAS say no to every application. Mr Jeyaretnam says climate of fear. You do not generate growth in the financial sector by fear. We have to know which banks to let in and which to keep out, what financial activities to promote, what to discourage, which ones to prohibit. Had we not done this, the financial sector would not have grown by 10% per year for 20 years. The question now is, of course: how do we continue to grow the financial sector vigorously for the next phase, and develop new activities and adjust to a new environment, without letting in any BCCI? That is the question we are now studying and I put it to all the Members that that is the question worthy of the best brains we can find and pay for. Let me take another example, which is the recent currency instability in the region. The problem started in Thailand. It spread to Malaysia, Indonesia and the Philippines. Thailand now faces severe economic austerity for at least two years - slower growth, company closures, retrenchments, higher inflation, because they had to up their sales tax, depreciated currency, devalued assets. This is the price the morning after for having borrowed excessively abroad to spend on unproductive investments, especially on a property bubble, and for the government and central bank not intervening earlier, when signs of trouble were already visible and when they had been warned by the World Bank to stop a property bubble and unsound lending by banks and financial companies. We have been relatively unaffected in Singapore. We have maintained our budget surpluses, we have built up our reserves and we have kept the currency strong. So speculators have not tried to attack the Singapore dollar. Against the US dollar, we have gone down 8%, but on a trade-weighted basis, which means that if you take all the countries which we do business with, exports, imports, its value has been stable. So when the newspapers asked why have things not become a lot cheaper because our neighbours' currencies have moved down, this is the reason. It is because our currency has remained stable overall. There is so little bad news about us to report that if you read articles on Southeast Asia's sick economies, you will come to the conclusion that there is no country in Southeast Asia called Singapore, because the charts, the paragraphs, the descriptions, the cartoons, Singapore never appears. We are mentally off the map. But it is better to be off the map than in trouble. We have been fortunate to avoid the problems on our balance of payments, our property bubbles, our unproductive investments, currency depreciation, loss of confidence and withdrawal of foreign capital. Last year in May, when the property bubble started to form, we pricked it and nipped the problem in the bud. We acted even though it was an election year, and there was a risk that if we overdid the correction, the property market might crash and we would go into the elections with everybody feeling very sour. But we had to take the risk because if we had allowed the bubble to continue for another year, and the property prices had gone up another 30% this year, in the year since then, this year when the region was hit by the tom yam effect, we would have been in for a severe tummy ache. You just take a very quick back-of-the-envelope calculation. Just HDB properties alone, 800,000 HDB properties worth, let us say, $200,000 each. That is $160 billion worth of assets, not counting your CPF, not counting your private property, not counting everything else we have. If our currency had gone down 30%, or if our property market had gone down 30%, that would have been 30% of $160 billion, which would have been $48 billion. How much have we paid in premiums to avoid that disaster? Without competent, honest Government, both Ministers as well as civil servants, who can set sound long term policies and resist populist pressures, we could easily have gone the way of the other economies. Every Singaporean would have been severely affected. The value of HDB homes, CPF savings, purchasing power of your salaries would have gone down, you would not be going off to Johor Baru for midnight shopping, and the confidence of both investors and citizens of Singapore in our future would have been shaken. But because we have had an able, determined Government, supported by a competent and professional civil service, who anticipated problems and dealt with them early, so we have stayed away from trouble. This will not be the last time that we run into a potential problem. And we may not be as lucky the next time. It makes no sense to quibble over Ministers' salaries, and to make it harder to build the best team for Singapore, by not paying the team what they are worth. Any committee of entrepreneurs, manufacturers, bankers, businessmen, or trade unionists will know that Ministers' salaries are a very small premium to pay for avoiding such catastrophes. [Applause.]