Hansard, 2000-06-30

Under the provisions of clause 2(d) of Article 46 of the Constitution of the Republic of Singapore, the following Members have been granted permission to be or to remain absent from sittings of Parliament (or any Committee of Parliament to which they have been appointed) for the periods stated: NameFromTo (2000)(2000) Mr Chay Wai Chuen 30 Jun30 Jun Mr Lim Swee Say 30 Jun30 Jun Mr Tan Soo Khoon5 Jul6 Jul TAN SOO KHOON Speaker Parliament of Singapore

asked the Minister for Communications and Information Technology, with the deregulation of taxi fares, (a) how the consumer will be protected; (b) how the taxi fare increases will be distributed; and (c) how much of each dollar of taxi fare goes to the taxi company, the various taxes (Certificate of Entitlement, import tax, registration fee, Electronic Road Pricing charges, etc), diesel and the driver.

asked the Minister for Communications and Information Technology whether the proposed increase in taxi fares has been made solely at the request of the companies that operate the taxi services or because the taxi drivers themselves have been complaining that they are not earning enough from the present fares.

Sir, may I have your permission to take Question Nos. 1 and 2 together?

Yes.

Sir, Members of this House will recall that the Public Transport Council (PTC) deregulated taxi fares in September 1998. This means that taxi companies now have autonomy to set taxi fares without needing to seek approval from the PTC. They now have more flexibility to introduce differentiated and niche services and to respond more quickly to changes in the environment through differential pricing strategies. The aim was to allow the forces of demand and supply to determine the pricing of taxi services that would optimise the utilisation of the taxi fleet. With deregulation, taxi companies have to consider carefully and individually decide on fare revisions based on their pricing strategy and supply-demand considerations. Taxi companies have to price their services at a fair level, taking into consideration, among other factors, the demand for their services, cost of providing the services, earnings of taxi drivers, competition from other taxi companies and other modes of transport, the need to generate adequate returns to pay for vehicle replacement, and to invest in expansion and upgrading. Commuters are in the best position to decide whether taxi fares are set too high or too low. If taxi fares are set too high, the demand will drop and taxi companies will not be able to operate their business profitably. Conversely, if fares are set too low, supply will not be able to match demand and service standards will drop. The deregulation of taxi fares therefore serves to optimise the utilisation of resources in meeting the demand for taxi services. Commuters stand to gain as it ensures that the pricing of taxi services is competitive. With fare deregulation, how each dollar of the taxi fare is distributed is determined by the taxi companies. We can expect that, to retain drivers in this highly competitive and tight labour market, taxi companies will have to enable their drivers to earn a decent income.

asked the Minister for Communications and Information Technology, in view of the trend that has emerged from the converging of Certificate of Entitlement prices, if his Ministry will reconsider and review the categorisation of COEs, in order to preserve and support a system in which car buyers will have more choices and the ability to opt for smaller capacity cars.

Mr Speaker, Sir, can I ask the Clerk of Parliament to distribute the handout? [Copies of handout distributed to hon. Members]. Sir, the Certificate of Entitlement (COE) categories for small and medium-sized cars were merged into one category, Category A, in May 1999, following a review by the Government Parliamentary Committee. The Committee had noted that ideally, there should only be one category of COEs, and recommended the merger of the two COE categories to also address the concern that the COE quota for small cars was declining while their COE prices were not greatly different from those for medium-sized cars. The merger of the two categories to form a larger quota has helped to stabilise COE prices. This does not however mean that the COE for smaller cars will be cheaper than that for bigger cars, because price is a function of demand and supply. Latest prices for Category B COEs for cars more than 1,600 cc against that for Category A COEs for cars up to 1,600 cc bear this out. The COE price of Category A is close to and sometimes higher than that of Category B. This is in spite of the fact that the monthly quota for Category A, as it stands now, is 2,617, which is more than twice the size of the quota for Category B, which is 1,153. Sir, combining the former COE Categories 1 and 2 into one category for all cars with engine capacity up to 1,600 cc has given car buyers greater flexibility to decide what cars to buy based on affordability. The fact that more choose to buy at the higher cc end of this category reflects consumer preference for such cars. This is notwithstanding the fact that there are other cheaper, smaller cc models in the category which are more affordable. As a matter of fact, the prices of some small cars have not changed much, compared to the first quarter of 1999 before the two COE categories were merged. I have distributed to Members some data to show the comparison of car prices to illustrate what I mean. If you look at Table 1, generally, the prices for small cars are lower than prices for medium-sized cars. When you look at Table 3, comparing the car prices, say, for small cars before and after the merger, you can see that the changes are not much. Some have gone up, some have come down. The reality is that car buyers have been able to benefit from the merger of the two categories and they are exercising their preferred decision. More of them appear to be opting for the bigger, though slightly more expensive models, rather than the cheapest models within the same COE category. On the part of motor dealers, they have responded to the change in demand pattern by adjusting the range and numbers of car models they import for the Singapore market. The decision to bring in fewer small car models is a reflection of the shrinking demand for smaller cars, even though such cars are still, as I have said earlier, generally cheaper and hence more affordable than the bigger cars. Owning a car is not a basic need. There is no reason why Government should intervene and arbitrarily decide on the market mix of the car population in Singapore. We should not influence the type of cars buyers should choose. It is best left to car buyers how much they are willing to pay for a COE and what type of cars they want to purchase. From the land transport point of view, all cars, regardless of the size of their engine capacity, occupy the same amount of road space when moving. Hence, traffic engineers have assigned all cars the same Passenger Car Unit (PCU) rating of 1. It is not the intent of the COE scheme to address the social issue of price progressivity. This issue is addressed through the Additional Registration Fee (ARF) and customs duty which are pegged to the Open Market Value (OMV) of the vehicle, and the road tax structure which is based on the engine capacity. Looking at the current COE trends, some have expressed the view that Government should move towards merging all car categories into one broad category. The COE categories were restructured just over a year ago. We will be introducing open bidding for COEs later this year. It is best that we let the system stabilise and observe the price trends of COEs and consumer preferences. Hence, the Government has no plans at this stage to merge the two car categories into a single category.

Sir, I would just simply like to ask the Minister of State that, albeit that cars are not a basic need, they do form a very real part of the aspirations of many Singaporeans and, therefore, the LTA, as it further studies refinements and hopefully enhancements from the public point of view, takes due consideration that it tries not to contribute more to the very real and growing feeling among ordinary Singaporeans that more and more things are getting out of reach of the little guy and of young people starting out in their careers.

Sir, we understand that the aspiration to own cars is there and, of course, subject to the congestion objective, the Government will try to help Singaporeans fulfill their aspiration. As I said, at the moment, there is progressivity also in the ARF and the road tax, and the COE is not intended to accentuate that progressivity. But what we can do is wherever we can, subject to congestion level, we will try to give more COEs and that will lower the COE prices.

asked the Minister for Manpower if he will give figures of complaints received for the last two years on ill-treatment and abuse of foreign domestic workers in Singapore and state the actions taken by the authorities in addressing these complaints.

Mr Speaker, Sir, in 1997, the Singapore Police Force recorded 157 substantiated cases of foreign domestic worker abuse. In 1998, the number of substantiated abuse cases reported by foreign domestic workers dropped to 89 cases and in 1999, it fell further to 82 cases. Members will recall that in May 1998, the Penal Code was amended to enhance penalties by 1.5 times for offences committed against foreign domestic workers by the employer or members of the employer's household. This appeared to have helped to reduce the number of cases of foreign domestic worker abuse. There are more than 100,000 foreign domestic workers working in Singapore. The number of cases of abuse or ill treatment is only a small proportion of the total number of foreign domestic workers working here. The vast majority of foreign domestic workers in Singapore are generally well-treated and enjoy a happy and rewarding working relationship with their employers. This is evident from the fact that Singapore continues to attract an increasing number of foreign domestic workers and many of them have in fact decided to extend their work permits beyond the normal two-year term.

I would just like to ask the Minister: is there a problem with domestic maids not complying with the terms of their work permit and therefore we have to send them off? What I am saying is that since the problem with employers is so small, what about the problems of the domestic maids themselves? Are there any significant problems?

Sir, I believe that the Member is referring to the group of foreign domestic workers who either take off from their employer's household and moonlight on their own in other occupations or are deployed by the employer to work in some other occupations. Let me assure the Member that while this problem exists and that, from time to time, my Ministry's enforcement officers come across such cases and take action against them, both employers and employees, the number of cases is small. It is not a growing problem. We are continuing to educate employers of foreign domestic workers on their responsibility, not only on the welfare part about treating the foreign domestic workers well and caring for them, but also to remind employers that they should not deploy them to work outside the household, whether it is to help out the employer in the hawker stall or in the provision shop in the neighbourhood. Such duties are obviously not part of the domestic duties of the foreign domestic worker and employers should refrain from sending their foreign domestic workers to work in such occupations. If they do and if they are caught, they face fairly severe penalties.

asked the Minister for Manpower what is the current status of the proposed establishment of the National Institute on Occupational Safety and Health.

Mr Speaker, Sir, a National Institute of Occupational Safety and Health was one of the proposals of the Manpower21 Report. Currently, my Ministry's Occupational Safety and Health (Training and Promotion) Centre carries out training in occupational safety and health (OSH) as well as implements programmes to promote OSH awareness. It conducts a wide range of training courses for managers, professionals, supervisors and workers. It also organises safety campaigns, seminars and workshops to promote safety and health in factories. We also have well-established private sector safety consultants to help companies improve their safety performance. In the case of research and development, we should tap the results of work by institutions in developed countries which are more advanced in OSH R&D. If there is a need to carry out researches on our own occupational safety and health issues, we can do that in collaboration with our institutions of higher learning, perhaps with funding from National Science and Technology Board. In other words, the major features of a National Institute of Occupational Safety and Health are already being addressed by the existing industrial safety framework. Hence we do not see an urgent need to establish an Institute on Occupational Safety and Health at this juncture. However, we will review the need for such an institute sometime in future.

asked the Minister for Trade and Industry if his Ministry has any plans to curb unregulated commodities trading firms that advertise in the newspapers for job applicants and subsequently apply strong arm tactics on the respondents to invest in commodities trading.

Mr Speaker, Sir, trading in commodities futures is regulated under the Commodities Futures Act. Currently, this Act covers only commodities that are traded on the Singapore Commodity Exchange (SICOM), namely, rubber and coffee. Firms that trade in other commodities are not regulated. As Mr Ong and other Members of the House have pointed out, some of these firms, commonly known as bucket shops, have enticed the public to open trading accounts with them. They engage in trading practices that are against the interest of investors. MTI will be proposing amendments to the Commodities Futures Act to extend the Act to cover all commodities and associated derivatives, and to require any firm that wishes to trade in commodities to be licensed. However, to ensure that, obviously, bona fide traders are not inconvenienced, several categories of traders (other than those trading in rubber and coffee) will be exempted from the licensing requirement. These categories will include principal-to-principal traders, over-the-counter traders and banks. The proposed amendments will help to stamp out bucket shops, without overly inconveniencing bona fide traders. In drafting the new legislation, we welcome the views of all Members of the House and the public.

Sir, as part of the review of the legislation, would the Minister also consider legislating a cooling off period from the date of signing the agreement, so that a prospective investor will have more time to consider his intentions before activating the investment account?

Sir, we can consider such a provision. But we have got to look at it from all angles to see whether it sets a precedent for other transactions which may become a problem. But we will consider it.

asked the Minister for National Development whether his Ministry will further enhance incentives for first-time buyers of Housing and Development Board flats so as to assist young couples start their homes and families earlier.

Mr Speaker, Sir, the HDB has several schemes to assist young couples to start their homes and families earlier. Firstly, HDB flats are sold at subsidised prices to ensure that they are affordable to young couples. Next, HDB provides mortgage financing at concessionary interest rates to first-timers. HDB flat buyers can make use of their CPF savings to pay the 20% downpayment. HDB also has a Fiance/Fiancee Scheme whereby young couples intending to get married can apply for new HDB flats before their marriage. For those on the Registration for Flat System, HDB allocates more flats to first-timers compared to upgraders, to enable the former to start up their homes earlier. Today, first-timers can select their HDB flats within one to one and a half years from the date of application. If they select completed flats, they can take possession of the flats within a few months from selection. Furthermore, first-time purchasers can buy resale flats or Executive Condominiums with the CPF Housing Grant Scheme. The grant of $30,000 to $40,000 will help to defray the initial cost of purchase of their resale flats or Executive Condominiums.

Sir, may I ask the Minister of State whether he would consider raising the loan ceiling for first-time buyers from 80% to 90%, similar to the existing schemes available for joint selection multi-tier family and confirmed Government officers?

Sir, the requirement of 80% is a prudent practice to ensure that buyers will buy flats within their affordability. We also have schemes to help low-income families to obtain a bigger mortgage financing. For ordinary first-timers, it is best that they stick to the 20% deposit. But if they have financial difficulty, they can always appeal to their MPs and we will look at the case on its own merit.

Sir, on the question of affordability, may I inform the Minister of State that, in fact, there are already affordability criteria, such as maximum quantum and maximum repayment period. The criteria are already in place. What is the worry on that?

Sir, the credit assessment that we have is to ensure that people buy flats within their affordability. The 20% downpayment is also prudent market practice in the private sector, and this policy is to make sure that people have enough savings before they actually start thinking of buying a flat. So I think it is quite a prudent approach.

asked the Minister for National Development (a) what is the status of planned and actual demand and supply of Housing and Development Board flats from 1998 to 2000; (b) how many HDB building project tenders were called in 1999 and the first quarter of 2000 and not awarded till to date; and (c) what is the waiting time for both new flat applicants and upgraders.

Mr Speaker, Sir, the HDB received 8,800 and 9,700 Registration for Flats System applications in 1998 and 1999 respectively, and an average of about 1,200 applications per month during the first five months of this year. As a result, the queue length for HDB flats has declined to about 37,000 as at 31st May 2000, compared to a peak of about 146,000 in the year 1996/1997. The shorter queue has enabled HDB to reduce the waiting time to about 1 to 1.5 years for first-timer applicants, and to about 3 to 4 years for upgrader applicants. In view of the lower demand for new HDB flats, HDB has reduced its building programme from about 28,000 units in 1998 to 22,000 units in 1999. It is planning for a further reduction of the building programme for this year. Nonetheless, the decline in HDB building works will not have a significant impact on the construction sector as work on other public buildings is projected to increase this year. On the status of HDB tenders, HDB called tender for 32 building contracts in 1999 and 9 building contracts in the first quarter of 2000. Of these, 14 contracts are still under evaluation, and the majority of which will be awarded between June and October this year.

Sir, may I ask the Senior Parliamentary Secretary how many construction firms working on existing contracts have been asked by HDB to slow down their programmes, and whether the HDB will compensate the contractors if these construction works are slowed down?

Sir, I am not aware that HDB has asked any existing contractors to slow down the existing building programme. What HDB has done is to evaluate the 14 contracts that will be awarded between now and October this year. In view of the reduced demand for HDB flats, HDB is now looking at the tenders that are going to the market, and those which we have called for tenders but not yet awarded. As regards compensation, for those tenders which are under the design and build category, HDB can consider it if contractors come to us and say, "You have called for tenders. We have put in effort for the tender and now you have decided either to defer or cancel it altogether." But so far, no contractor has come to us and asked for compensation.

Sir, may I ask the Senior Parliamentary Secretary whether the HDB is prepared to relax the so-called offer of rejected flats for walk-in selection? There are new applicants for certain flats. Sometimes there are rejections. These flats are normally pooled and put up in advertisements for the next allocation. Can we open it up earlier so that applicants can walk in to select flats?

Mr Speaker, Sir, we can consider that proposal.

asked the Minister for National Development if the Housing and Development Board will (i) allow single persons to purchase new 4-room flats; (ii) allow HDB lessees (within the 5-year occupation period) to downgrade to 3- or 4-room flats; and (iii) increase the income ceiling for rental flats to $1,000.

Mr Speaker, Sir, as a general policy, our public housing programme requires flat applicants to form a family nucleus to qualify for the purchase of a new flat from HDB. This is in line with the philosophy that the family is the basic building block of a strong and stable society. However, to meet the housing needs of some Singaporeans who remain single and would like to live on their own, the HDB has in place two schemes, namely, the Single Singapore Citizen Scheme and the Joint Singles Scheme. Under the Single Singapore Citizen Scheme, singles who are 35 years and above can buy resale 3-room or smaller flats located outside the urban areas. The 3-room flats provide more than sufficient space for singles who live on their own. Under the Joint Singles Scheme, two eligible single citizens can jointly purchase resale flats of any size anywhere in Singapore. The CPF Housing Grant Scheme is also open to first-timer single applicants who are 35 years or more. Today, the grant is $11,000 under the Single Singapore Citizen Scheme and double that, $22,000, under the Joint Singles Scheme. Sir, as there are sufficient avenues to meet the housing needs of singles, I think for now there is no need to allow singles to purchase new 4-room flats. Dr Teo also asked about downgrading during the first 5-year occupation period. In general, HDB requires lessees to occupy their flats for at least five years before they can sell them in the open market. This is to deter speculation on HDB flats, which are heavily subsidized. However, there are two options available to HDB lessees if they need, for whatever reasons, to downgrade to smaller flats within the 5-year occupation period. First, they can surrender their existing flat to HDB and then purchase a resale flat from the open market; or they can mutually exchange their existing flat with another lessee, provided both parties have completed a minimum 1-year occupation period and meet the requirements of the scheme. Dr Teo also asked about raising the income ceiling for rental flats. Sir, HDB reviews the income ceiling regularly to take into account changes in household incomes. In the case of rental flats, raising the ceiling from the current $800 per month to $1,000 per month may be against the Government's objective to help as many Singaporeans as possible become home owners. Nevertheless, I would like to assure the House that HDB does exercise flexibility to allow families with incomes exceeding $800 per month to rent HDB flats at subsidized rental if there are mitigating circumstances. HDB also has several assistance schemes, such as Sale of Flats to Sitting Tenants, Sale of 3-Room Buy Back Flats and Rent and Purchase Scheme, to help the lower income groups to own HDB flats.

asked the Minister for Manpower if his Ministry has any plans to provide further incentives to workers from the lower-income group to enrol for training courses to upgrade their skills, for example, by giving an appropriate level of training grants directly to these workers.

Sir, worker training is critical for our economic competitiveness and successful transformation into a knowledge-based economy. With economic restructuring, the types of jobs available and the skills needed to perform these jobs will continue to change. These new jobs will require higher skills. For Singaporeans, especially lower income and less educated workers, continual skills upgrading is the key to ensuring employability and enhancing incomes. Hence, the Government has recently committed additional funds to motivate and facilitate skills upgrading. In February this year, my Ministry established a $200 million Manpower Development Assistance Scheme (MDAS) to support manpower development initiatives over the next five years. Of the $200 million, $90 million has been set aside for the Skills Redevelopment Programme (SRP), aimed at retraining lower skilled workers. This is in addition to the $50 million committed to the programme in 1998. Under the SRP, we aim to provide training for 100,000 workers over five years. Currently, we have about 26,000 workers who have completed or are undergoing SRP training. Companies sending their workers for training receive generous grants, covering up to 100% of course fees and 85% of absentee payroll. SRP also covers those who are unemployed or those who initiate their own training. They can sign up for the training programme through the CDCs and self-help groups. Already 6,700 Singaporeans had done so. The Government has also generously supported the Education and Training Fund (ETF) set up by the NTUC with a matching grant of $3 for every $1 raised by NTUC. Since 1998, the Government has committed $15 million to the fund. The ETF supports training for union members. In addition, with effect from 1st July 2000, the salary cap for the Skills Development Levy will be raised from $1,000 to $1,500. The change will raise the total levy collection from the current level of $20 million a year to about $48 million a year. This will significantly increase the training grants that can be made available under the Skills Development Fund. Apart from supporting employer-based training, the SDF also operates a Surrogate Employer Scheme. Under the scheme, Singaporeans who sign for training through the self-help groups or CDCs can also benefit from SDF's training grants. As it stands, I believe that we have sufficient resources to fund skills upgrading for lower income workers, whether it is employer-based or individual-initiated. Our biggest challenge now is not so much in finding funds for upgrading but encouraging both employers and workers to come forward and utilise these incentives and embrace continual skills upgrading.

asked the Minister for Home Affairs whether the Government will declare any of the existing civic societies as political organisations under the Political Donations Act.

Sir, the Government currently has no plans to gazette any civic organisation as a political association under the Political Donations Act.

Sir, can I ask the Minister to clarify and confirm that they have reviewed the activities of all civil societies which are engaged wholly or partially in politics and have justified and assured itself that a gazette under the Political Donations Acts is not necessary?

As I have said, the Government currently has no plans to gazette any civic organisation.

Could the Minister of State tell the House how the Minister would exercise the discretionary powers in deciding which of the organisations are to be declared as political organisations? My second question is: how can the Minister assure this House that such wide discretionary powers are not used solely for partisan political agenda that is to be used against groups whose views differ from that of the Government?

Sir, this matter has been debated widely and thoroughly during the Second Reading speech of the Minister in this House. In fact, in his speech he also mentioned the factors that he would consider in deciding whether or not to gazette any civic organisation, ie, the objects and activities of the organisations, its links with foreign organisations and the support it receives from foreign organisations. Sir, clearly this Bill is not a Bill designed to benefit any political party, whether PAP or otherwise. It is a Bill that benefits Singapore and Singaporeans. I think all of us in this House and all Singaporeans will agree that foreigners should not attempt to influence the domestic political process through this means of providing funding to any group in Singapore.

The following question stood in the name of Mr J.B. Jeyaretnam - 12. To ask the Minister for Home Affairs why the two policemen who shot to death the man at Seletar Club Road have not yet been charged in court with murder.

Question No. 12, Sir.

Sir, investigations into the case are still in progress. When investigations are completed, a Coroner's Inquiry will be held during which the full facts of the case will be presented. At the conclusion of the Inquiry, the Coroner will deliver his verdict as to the cause of death. Until then, it is premature to discuss whether the police officers involved should be charged for murder.

asked the Minister for Community Development and Sports (a) how many cases of drowning were reported in Singapore from 1998 up to the first five months of 2000; (b) what measures are taken to educate the public on water safety; and (c) if his Ministry will consider providing resources to help the Singapore Life-Saving Society conduct more water safety courses and public education programmes.

Sir, swimming is an immensely popular sport in Singapore. In 1998 and 1999, Singaporeans made a total of 13.2 million visits to our Singapore Sports Council (SSC) swimming complexes. While we are encouraged by this healthy trend, I am very sad indeed to inform the House that we have had two drownings between 1998 and May this year in SSC swimming pools. My Ministry and the Singapore Sports Council take safety in sports very seriously. We need to ensure that the public can engage actively in sporting activities without putting themselves at risk unnecessarily. With regard to public education on the importance of water safety, the SSC sponsors the Singapore Life Saving Society to organise talks on drowning prevention and water safety. These talks attract a lot of interest from pool operators, teachers, students and also members of the public. The Council has also been actively providing assistance to the Singapore Life Saving Society such as letting its facilities at nominal cost. Under this arrangement, the Society has set up a Lifesaving Training Centre at Kallang Basin Swimming Complex. The Centre actively conducts courses, tests and seminars aimed at producing professionally trained lifesavers in Singapore. The SSC and the Singapore Life Saving Society will continue to work together to conduct more water safety courses and public education programmes. This will, we hope, help make swimming an even safer sport for everyone to enjoy.

asked the Prime Minister what is the status of the various financial assistance offered to Indonesia in terms of trade financing facilities and loans to assist Singapore companies to purchase or invest in Indonesian Bank Restructuring Agency (IBRA) assets.

Sir, in January this year, Prime Minister Goh led an international business delegation to Jakarta and announced a package of economic measures to help catalyse Indonesia's economic recovery. The principal elements that Mr Zukifli referred to are: (1) A US$500 million Singapore Co-Investment Fund for the major Singapore Government-linked companies (GLCs) to co-invest with other foreign investors in assets which IBRA wishes to dispose, and in other financially-viable investments. We hope that our co-investment can help to enhance international confidence in Indonesia. To avoid creating the wrong perception that the Singapore Government was profiting from such sales, the GLCs will only take a small stake in these assets. (2) A S$400 million loan financing scheme to encourage Singapore companies to look for commercially viable opportunities in Indonesia. The scheme is administered by the Economic Development Board through participating Singapore-based banks. In March this year, IBRA successfully disposed its stake in Astra - an Indonesian car maker, through an open tender. The winning consortium, led by Singapore's Cycle and Carriage, included the Government of Singapore Investment Cooperation (GIC) which invested US$76 million for about a 6% stake in the company. The GIC's role in the transaction was in line with PM's pledge that Singapore would act as a catalyst to enhance investor interest and encourage the flow of investments into Indonesia. The sale was reported favourably by the international media and both IBRA and the Indonesian Government have noted the positive role played by the Singapore Government. More recently, Temasek Holdings teamed up with two leading palm oil companies - Golden Agri-Resources and Cargill - to own, develop and operate oil palm plantations in Indonesia. Cargill and Golden Agri-Resources will have equal share in the joint venture while Temasek Holdings will take only a minority stake. For the loan financing scheme, a seminar was held in February to elaborate on the details. It generated a lot of investor interest at the start. Participating banks received many queries. However, to date, the actual take-up rate has been low. About S$14 million have been committed in four projects. Participating banks have received feedback that investors are adopting a "wait-and-see" attitude, citing the country risk involved. Our private sector has taken the initiative to conduct business missions to Indonesia to assess the situation. Early this month, the Singapore Confederation of Industries (SCI) organised a mission to Indonesia. I understand that there was a fruitful business-matching session with the Indonesian Chambers of Commerce and Industry. A Business Action Plan was also signed between the Confederation and the Chambers, calling for closer cooperation between the two associations. As for the other elements of our assistance package to Indonesia, STB will continue to implement the S$2 million tourism and marketing package to help Indonesia restart its tourism promotion activities. Singapore sponsored Indonesia's participation in the PATA (Pacific Asia Travel Association) Travel Mart 2000 in April earlier this year with 17 booths, showcasing the best in Indonesian travel products. STB is currently working on an advertising campaign to promote Singapore and Indonesia as complementary destinations. This campaign is scheduled to start in the last quarter of this year. We will also continue to work with the Indonesian authorities to enhance the investment possibilities in the Riaus. Singapore will continue our efforts to play a catalytic role to help Indonesia recover economically. We will continue to encourage our private sector to look for suitable investment opportunities that could also help in Indonesia's recovery. However, their investment decisions will depend on the availability of commercially viable deals, and the perception of political risk.

Indonesia is a strategic partner. In view of the low take-up rate, would the Minister think it necessary now to consider reviewing this scheme to improve the take-up rate? And secondly, have there been other requests also because of the low take-up rate by the Indonesian government to come out with new schemes to review or refine existing schemes available?

Mr Speaker, Sir, I do not think we should rush because private monies are involved here and they have got to make realistic assessments of the situation in Indonesia in all its aspects - economic, political, social. And while the Government can be helpful, the Government should not be pushing such investments. Our role is a catalytic one, but in the end, it is for private investors to make their own decisions.

I would just like to ask the Minister whether he could give us the number in the investment made, in the case of acquisition of Astra and the one did by Temasek Holdings. How much of these facilities are used by Temasek Holdings and the other company that is making the investment?

Mr Speaker, Sir, as I mentioned earlier, GIC's investment in Astra was US$76 million for about a 6% stake in the company. As to the investment by Temasek in the oil palm plantations in Indonesia, I do not have the number here.

How much of the estate comes from the package as offered to the companies investing? That means, how much of the money has GIC used in this package?

I thought I have already given the number.

The entire US$76 million.

Yes, for Astra.

The following Question stood in the name of Mr Simon S C Tay - 15. To ask the Minister for Finance if he will explain the nature and extent of Singapore's commitment to currency swaps with our regional neighbours, following the "Chiang Mai" initiative among ASEAN plus 3 countries, and the effect, if any, on our reserves.

Question No. 15, Sir.

Mr Speaker, Sir, Singapore has an existing commitment to the ASEAN Swap Arrangement, or ASA for short, which was established on 5th August 1977, together with the central banks of Indonesia, Malaysia, the Philippines, and Thailand. It is a co-operative financing facility aimed at alleviating temporary balance of payments needs among the five member countries. The total facility under the ASA amounts to US$200 million, which is to be contributed in equal amounts by each participating member, that is US$40 million each. The participating member is permitted to draw on the facility for up to a maximum amount of twice their contributions, which is US$80 million. Allow me now to explain a little about the mechanics of this swap arrangement. A member country with liquidity problems or needs can exchange or swap its local currency for US dollars provided by the other member countries of the swap arrangement. A currency swap is effected through a spot purchase of US dollars against the domestic currency of the borrower, accompanied by a forward sale of US dollars by that borrower against the same amount of domestic currency. The interest on the swap facility is the difference between the forward and spot exchange rates, determined by the interest rate of the Eurodollar deposits for the relevant period of the Arrangement as quoted by the Bank of International Settlements in Basle, two working days prior to the value date. A swap transaction shall be for a period of one, two or three months, and may be renewed once for a maximum of another three months. The swap facility is made available only to the central banks and monetary authorities of the participating ASEAN countries. A participant may choose not to participate in a swap transaction. The "Chiang Mai" Initiative was an outcome of the ASEAN plus three Finance Ministers Meeting held in Thailand in May this year, and was in recognition of the need to establish a regional financing arrangement to supplement existing international facilities. The "Chiang Mai" initiative can essentially be broken down into two parts: (a) An expansion of the ASEAN Swap Arrangement to include all ASEAN countries; and (b) The establishment of a network of bilateral swap and repurchase agreement facilities among the ASEAN countries and the plus three countries of China, Japan and the Republic of Korea. However, the details of the Initiative and its implementation are not yet finalised, and are still being worked out by the central bank officials. Mr Tay also asked what impact this swap arrangement will have on Singapore's reserves. In short, there will be none. The currency swap arrangement is a form of collateralised short-term loan. It is no more than a conversion of one form of asset to another, that is, from US dollars to its equivalent in another currency, with the commitment that the transaction will be reversed at a future date at a predetermined exchange rate. Thus, there will be no impact on our reserve position. Because of our close links with our neighbours in the East Asia region, Singapore is affected by the economic well-being of their economies. This was clearly demonstrated by the recent financial crisis. It is therefore in our interests to do what we can to maintain economic and financial stability in the region. The "Chiang Mai" initiative is just one step towards this larger goal.

The following Question stood in the name of Mr J. B. Jeyaretnam - 16. To ask the Minister for Home Affairs if he will explain why no action was taken by the police against the illegal assembly outside the Singapore Recreation Club at its annual general meeting and the reason for not proceeding against the organisers.

Question No. 16, Sir.

Mr Speaker, Sir, Police is investigating the incident which occurred outside the Kallang Theatre, not at the Singapore Recreation Club, as stated in the Question. Investigations are in progress.

The following Question stood in the name of Mr Tay Beng Chuan - 17. To ask the Minister for Trade and Industry if he will provide an update on his recent visit to Mexico and the progress of the Mexico-Singapore Free Trade Agreement negotiation.

Question No. 17, Sir.

Mr Speaker, Sir, in September last year, President Zedillo and Prime Minister Goh Chok Tong agreed to explore a Free Trade Agreement (FTA) between our two countries. Subsequently, in February this year, the Ministry of Trade and Industry of Singapore and the Secretariat of Commerce and Industrial Development (SECOFI) of Mexico agreed that negotiations would begin in July. There were two main purposes to my recent trip to Mexico. First, to open Singapore's first trade office in Latin America. This is in recognition of the closer trade links between Mexico and Singapore and the potential for greater expansion in the future. Over the last ten years, trade between Singapore and Mexico increased by an average rate of over 30% a year, reaching $2.2 billion last year. In 1998, Mexico exported more electronics products to Singapore than to the rest of East Asia, including China, Korea, Japan, Hong Kong and Taiwan combined. The second purpose of my trip was to deliver a personal letter of invitation from Prime Minister Goh to President Zedillo to visit Singapore in November before he steps down at the end of the year. I also met with my counterpart Minister, Dr Herminio Blanco. Dr Blanco and I agreed that we should try to complete our negotiations for an FTA by November, in time for Prime Minister Goh and President Zedillo to witness its signing when the President is in South East Asia for the APEC Leaders' Meeting. However, we may not be able to complete negotiations within this short time frame. If negotiations cannot be completed by then, Dr Blanco and I will sign a document listing the areas that our negotiators have agreed on and expressing our common intention to complete negotiations by the middle of next year when a new Mexican administration has been in office for a number of months. If the candidate of the present ruling party wins, there will of course be continuity. I have taken the precaution of sounding out the principal opposition candidate from PAN. He has expressed his full support for the FTA. Elections are due this weekend. The key businessmen and representatives from the business associations we met in Mexico also expressed general support for the FTA. While there were some concerns about the impact of the FTA on specific domestic sectors, these concerns arose from a lack of knowledge about Singapore. Fundamentally, Singapore poses no threat to politically-sensitive sectors in Mexico like steel and textiles. We will negotiate an Investment Guarantee Agreement as part of the FTA to facilitate Singapore investment in Mexico. While our present investment in Mexico, which currently amounts to US$133 million, is small in relation to our investment in Asia, it has grown significantly in recent years. The Mexicans are very keen to have more of our businessmen invest in Mexico to take advantage of NAFTA. Strategically, we see Mexico as our gateway into Latin America and we hope that Singapore can be a gateway for Mexico into Asia.

asked the Minister for National Development whether the Housing and Development Board will allow immediate family members of those affected by the Selective En-Bloc Redevelopment Scheme at Hillview Estate to select their flats from the balance units of the replacement site.

Mr Speaker, Sir, the new replacement flats being built for offer to Hillview lessees affected by the Selective En-Bloc Redevelopment Scheme (SERS) are located at Bukit Batok West Avenue 5. After the SERS lessees have selected their flats, the priority is to offer the balance units to eligible flat tenants of the rental block at Block 11 Hillview Avenue which has been earmarked for relocation in tandem with the SERS programme. HDB will look into the allocation of the balance units at Bukit Batok West Avenue 5 after the Hillview SERS lessees and flat tenants have selected their new replacement flats. Notwithstanding the above, there are already several schemes which enable parents and married children to live near each other. For example, SERS lessees may include their parents or their married child in the application for a new replacement flat so that they can stay together in the new flat as an extended family. First-timer flat applicants may also apply to the HDB for the $40,000 CPF Housing Grant Scheme to buy a resale flat to live near their parents or children.

asked the Minister for National Development whether the package to be offered to civil servants crossing over from the Primary Production Department to the Agri-food and Veterinary Authority has been finalised.

Mr Speaker, Sir, generally, ex-PPD officers were transferred to AVA under no less favourable terms. However, for a group of non-pensionable officers who joined the Service before 7th December 1984, they lost the opportunity to claim pension benefits under the CPF-Annual Allowance Gratuity Option as they will no longer be civil servants when they retire at the compulsory retirement age. This policy has been applied consistently in all past conversion exercises. The CPF-AA Gratuity Option is not an entitlement. Nevertheless, the Government understands the officers' concerns. MND, in consultation with PSD and MOF, recently worked out a lump-sum ex-gratia payment for each of the affected officers. The payment will be made to the officers' CPF account. The staff and the Union have been briefed on the matter.

asked the Minister for National Development when will the wet market situated at the corner of Serangoon North Avenues 3 and 4 be opened for business.

Mr Speaker, Sir, the 2-storey development at Block 542B Serangoon North Avenue 3 is expected to start operating in 3rd Quarter of this year. HDB is currently discussing with interested parties such as NTUC Fairprice Co-operative Ltd to operate the market and eating establishment in this development.

The following Question stood in the name of Mr Tay Beng Chuan - 21. To ask the Deputy Prime Minister if the Government will consider a more moderate across-the-board increase in the salary revision for civil servants, in order not to drive up our overall wage cost too fast and cause a runaway increase in prices and charges which will cause more hardship to the low-income group and make our businesses even less competitive, compared with other countries.

Question No. 21, Sir.

Mr Speaker, Sir, the Government announced revisions to Civil Service salaries yesterday. These revisions were to enable civil servants to be paid competitive wages. Parliament is debating the issue and I will respond to this and other comments by MPs in my winding up reply.

asked the Deputy Prime Minister (a) what is the status of the process to merge the local banks; (b) whether there has been any change in the policy to encourage local banks to merge; and (c) whether there are further liberalization policies to open up the banking and financial sector.

Mr Speaker, Sir, MAS' view on bank consolidation remains unchanged - that the Singapore market is too small to support more than two major local banks, and that further consolidation and mergers will help banks to achieve economies of scale and compete internationally, or at least regionally. Nevertheless, the decision to merge has to be made by the local banks' managements and shareholders. MAS can only encourage, not dictate. There have been no moves by the local banks to merge so far. As competition intensifies in the banking industry, through the progress of technology and our liberalisation measures, the pressure on banks to consolidate and rationalise will grow. Alternatively, banks can choose to become niche players in specific segments. The measures to open up the domestic banking market that MAS announced ---- 1.30 pm

Order. End of Question time. [Pursuant to Standing Order No. 21(3), Written Answer to Question No. 22 is reproduced in the Appendix (Cols. 627-628)]

"to provide for the registration of designs in Singapore, to repeal the United Kingdom Designs (Protection) Act (Chapter 339 of the 1985 Revised Edition), and to make related amendments to the Copyright Act (Chapter 63 of the 1999 Revised Edition)", presented by the Minister for Law (Prof. S. Jayakumar); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Income Tax Act (Chapter 134 of the 1999 Revised Edition)", recommendation of President signified; presented by the Minister for Finance (Dr Richard Hu Tsu Tau); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Building Control Act (Chapter 29 of the 1999 Revised Edition)", presented by the Minister of State for National Development (Dr John Chen Seow Phun); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Resumption of Debate on the Deputy Prime Minister's Statement [29th June 2000]. Question again proposed.

Mr Speaker, Sir, I rise to support this pay rise. The prevailing local conditions of CPF cuts, widening wage gap between the top income earners and the lower income earners, higher transport and utilities costs make the upward pay revision debate of all political appointees and top civil servants very embarrassing. Yet, globalisation and fast changing technology require us to move quickly to meet the new challenges. Thus, the urgent need to retain talented people in the civil service and the political arena to take our country into the very competitive world markets. We are in Government to provide the ambience for the private sector to create wealth and jobs for Singaporeans. We must pay them well. Yesterday, many in the House were revisiting many old arguments on why politicians must put service before self, and I agree. But the discussion should be centred, in my opinion, on whether the changes made to the two benchmark formulae will be able to meet the changing wage pattern in the years to come. We will debate on these equally important issues at a later date, or we may lose sight of the topic under review. I know it is difficult to de-link, but we must try. So with this as the background, we have to ask whether we are comfortable with the revision in the remuneration package and can we avoid the situation we are facing now. I think today's debate is not why top civil servants and political appointees should be paid well. This issue was argued in this House during the last debate on the subject. We agreed and we discussed how best we could pay them. And it was in that debate that the current two benchmarks, 15P32 and 2/3 average 24, were thoroughly discussed and agreed upon, some grudgingly. I remember SM said that once we agreed on the formula, we need not come back to this House again to discuss this politically emotive issue. But we could not achieve this because of two changes taking place in the world. One is the new economy companies, including dot.coms and life sciences. Their remunerations do not follow the norm. Second, stock option is becoming an accepted way of rewarding the top executives. This portion of reward far exceeds their basic salary. How we address these two will be a challenge for us. 15P32 apparently is working well. But I am not so sure how long it needs another review, seeing the big numbers coming from the United States corporate remunerations. For example, let me give you some idea. Last year, US CEOs, on average, earned an incredible 475 times more than what the workers did. If you compare this to 84 times in the year 1990, it is a very big jump. We may not see such figures in Singapore yet. But we tend to follow the US trend. Today, the average Singapore CEO earns 44 times more than the average worker. DPM has proposed three changes. The first one is to put more numbers in the basket of top earners, that is, increase to eight, instead of the present four top earners in the six categories - banking, accountancy, law, engineering, local manufacturing and multinational companies. The second change is to rank these 48 top earners in these categories and take the median. And third, stock options, a portion of the 48th top earners be divided by two, that is, accept only 50%. The two points of increasing the pool of top earners to 48 and taking the median as a reference base definitely improves the formula. But, again as before, it fails to address the point that these 48 top earners change every year. This has been brought up a couple of times by other Members of Parliament. The question some are asking is, as long as the pay of the 48 top earners in the private sector keeps changing, Ministers' pay will always receive an upward revision of their pay, as experienced in the recession years. To many, this is a win-win situation. Is there a reason for not changing? Perhaps, DPM would want to consider keeping half of the 48, that is, 24 top earners permanent and rotate the rest. This could be a compromised move to reflect the truer comparison as the same cohort of 24 is used for every year. The ideal of course is to use the same cohort of 48 each year. It is only a suggestion. With the new economy, the salaries of top CEOs will continue to go up as the salaries are based on the individual's worth and not on good or bad years. If we take the cue from the US again, in 1994, the US CEOs made US$2.8 million. Last year, the average CEO of large corporations earned US$12.4 million. As Singapore is 12 to 18 months behind the US, we can expect next year's salary of our CEOs to follow suit and a corresponding increase of our top civil servants and political appointees. A large portion of pay package could come from stock options. Thus, halving the amount of the stock option portion, as suggested in the new formula, may be very high in the coming years. I therefore suggest that we consider putting a cap on this. One suggestion is to use the present stock option portion of this revised formula as a benchmark to work out a figure on this. In yesterday's DPM's speech, he said, and I quote: "Executives may exercise in a single year stock options which they have accumulated over several years, especially in a bull market. To accept the full amount of stock option gains without any discount is unfair and will skew the benchmark upwards." Therefore, my suggestion for a cap is reasonable. Finally, Singaporeans are not aware that the Minister's salary is a total package. Many Singaporeans do not realise this. There are no perks, like car, driver, house, maid, medical benefits, etc, and that the bonuses form part of the pay package. Mr Speaker, Sir, I have made a few suggestions which I hope DPM will consider. I support this revision in salaries.

Mr Speaker, I rise to support this statement and wish to compliment DPM for the transparent manner in which this issue was proposed. Inevitably, the transparent manner of discussing this matter will generate discussion and debate. Even in private sector, discussions on salaries and remuneration are usually sensitive and touchy. In a small country, like Singapore, where everybody knows everybody, you cannot avoid this issue being personalised. This, I think, will remain for some time an unavoidable outcome to this issue. Sir, since this was announced yesterday, I asked a number of people whether it is too much to pay the Prime Minister about $1.9 million or $34 million annually for elected Members of this House. Most really do not know how much is enough. But they agree that the Prime Minister, for example, should be paid a very high salary for the job he is doing. In fact, some are puzzled that, despite the increase, the Prime Minister is still ranked 63rd among top salary earners. Many have no qualms to have our Prime Minister being the highest paid among top professionals. This shows that Singaporeans now understand that we need to pay the best to attract the brightest to do what is seen as the most important job in this country. However, Sir, there are problems, especially with benchmarking civil service salaries with the private sector and this can be problematic. It is quite clear that most top jobs in the private sector carry a high level and element of uncertainty in a hire-and-fire environment. For the Minister, some said that at least he gets a five-year contract before his next election, a luxury private sector executives do not enjoy. While the salary review has been very comprehensive and, in my view, quite revolutionary, as it has even made Permanent Secretaries non-permanent, it will be difficult to avoid or eradicate completely, like DPM said, the "hentak kaki" mentality, in a large organisation like the civil service. We need to consider a number of things. While we have a transparent system of paying top wages to attract talents into the civil service, we seem to have less than a transparent system in dealing with non-performers. With a large organisation like the civil service, we can possibly have a free rider situation. We therefore need to be more comprehensive in the scrutiny and management of those who are not performing well. I do not see this as a problem of political office holders as they are more visible but the same cannot be said of civil servants who are generally and sometimes seen to be insulated from blame and problems. Second, there is also the time lag problem which has made it necessary to have salary or wage increase even at a time when private sector salaries are just coming out of a recession. Perhaps, one suggestion is to appoint a group of search firms tasked to recommend salaries consistent with formulas that have been established. This is a practice adopted by many in major MNCs and can similarly be done to determine civil service salaries. Such firms can be more responsive and therefore close the time lag problem. There is another benefit to this, that is, you have a third party telling you what is the going market rate for these professionals which would make it easier to handle this issue, because some feel that even if salaries are pegged at much higher levels today, the overwhelming majority that the PAP has in this House will make this a foregone conclusion. Another problem you have is that when you provide a range of salaries for certain categories of the same grade in the civil service, the number of people you can compare within that same grade is far too small to provide any meaningful competition as in the case of private sector where there are a lot more competition and similar types of jobs in other companies. Therefore, I think the appointment of search firms may be relevant in this case. I am, however, concerned about one possible unintended consequence of this whole exercise and, that is, whether it will affect the moral authority of civil servants and political office bearers to govern because moral authority is extremely important. I travel in the region almost every week and have discovered the deep and wide respect that this Government enjoys, not only in Singapore but also outside the region and, partially, this has got to do with the fact that previous office holders have demonstrated a level of self-sacrifice when it comes to their own wages and remuneration. I am also aware that we have existing procedures and policies of existing office holders who exercise restraint in making investments or getting themselves involved in other kinds of jobs. I think this is something that we need to make clear and something which we need to guard against to make sure that while we pay top wages to our office holders, they are not seen to also compromise on the other investments. Again, in this particular instance, I think political office bearers are visible, they can be seen, people know what they do, where they go, where they live, what car they drive. But the same cannot be said for civil servants. That is where we need to be more careful and have provisions to avoid such conflicts instituted and not be the subject of abuse. On the whole, Sir, I would like to again reiterate my support for the statement.

(In Mandarin): It is often said that touching on the subject of money would hurt inter-personal relationship. Even in a company, some people would be unhappy if one of their colleagues gets a pay raise of only $50 or $100. We are now talking about the pay increases of our Ministers. Thus, we have to take more pains in explaining this matter to the people. Many governments do not publicly discuss pay increases for ministers, especially in countries where the ruling party is weak. The ruling party is worried that it might be voted out. Other governments do not discuss this because the country cannot afford higher pay for its ministers. The result is a less than clean government. Singapore is unique. Firstly, we discuss the issue of ministers' pay openly. The Government takes a long-term approach to this issue because we want to maintain a first class government with first class efficiency. Secondly, our system is highly transparent. Some people ask why we are so transparent about the high salaries of our Ministers. There are many other easier ways to compensate them and to supplement their salaries, for example, giving them housing allowances, providing them with a chauffeur or a maid. The Government can also increase their salaries quietly through promotion. If we do that, things would have been much easier. However, it is not the style of the Government to do that. We want to lay everything on the table and allow even the formula for calculating Ministers' salaries to be brought up for public scrutiny. This is a very honest way of dealing with the matter. When we discuss this issue, my view is that the emphasis should be on how to establish a system to determine ministers' salaries rather than focusing on the individual minister's salary. I think this would make our discussions more objective and rational. Ministers and top civil servants are charged with the very heavy responsibility of improving the standard of living for Singaporeans. We have to establish a system so that the Government and the civil service can attract the best talents. The achievements of our Government are for all to see. There is no need for us to blow our own trumpet. Recently, I had a conversation with an Ambassador of a foreign country. She told me that in the past three years, there were two things in Singapore that left a very deep impression on her. First, during the financial crisis, the Government had time and again devised strategies to tackle the recession, and eventually led Singapore out of the recession - the first country in this region to do so. Secondly, while we were dealing with the recession, we also made preparations to face the challenges of the new economy, that is, to plan for the future. Recently, I spoke to a couple of Hong Kong entrepreneurs and they told me the property market in Hong Kong had fallen drastically. This had caused a lot of unhappiness among the people and many of them had taken to the streets to demonstrate against the government. These Hong Kong entrepreneurs asked me how Singapore managed to prevent such a predicament. I told them that in Singapore, the political leadership had anticipated the problem of `over-heating' of the property market and introduced some timely measures to cool down the situation in the property market. This is the difference between Singapore and Hong Kong. As a matter of fact, PERC, an independent think tank based in Hong Kong, in its report in May, rated the Singapore Government as number one in terms of political leadership and economic policies. Sir, we should not look at the revision of Ministers' salaries in an isolated manner. We have to take into consideration the various factors in the public and the private sectors. We are now in the midst of transforming into a new economy. There are many attractions for talented young people to go into the private sector. This bodes ill for the public sector in the long term. On the other hand, if the salaries in the public sector are much more attractive than in the private sector, it is also not an ideal situation because the private sector might be weakened as a result. Between these two sectors, we have to maintain a balance so that there will be a free flow of talents. They should be able to move from the public sector to the private sector and vice versa. We want to have first-class talents in the public sector so as to help formulate and implement policies as these policies will affect the private sector and all the people of Singapore. As for the relationship between the political leaders and the civil servants, let me share this story with members. Recently, I attended an international conference where I met a delegate from an economy whose government was just newly elected. I asked him about his government's new economic policies. He told me that the new government had only two priorities - one was environmental protection and the other was to please the workers. As for how to promote economic development, the new government had no ideas at all. He said that civil servants were facing big problems. This shows that if the political leaders are weak, the government will not be able to function satisfactorily even if you have good civil servants. The ideal situation is where the political leaders are more far-sighted and more capable than the civil servants. Secondly, I would like to talk about the relationship between the political leadership and the private sector. Yesterday, some MPs opined that the risks in the private sector are higher. Of course, there are risks in the private sector. Ministers also face high risks, though different types of risks. As for the responsibility that they hold, I think no one will have any doubt that theirs are very much heavier. They have to care for 3 million Singaporeans, their employment, their education and their future. In times of peace and prosperity, we will not appreciate the important roles played by the Ministers. Only in a crisis will we realise the importance of having a good Government. The political leadership, the civil service and the private sector should maintain a balanced relationship so that there can be mobility among talents in these three sectors. We have a very limited pool of talents. If we can work out a salary formula, which can facilitate the flow of talents among these three sectors, it will be to the advantage of our country. The existing formula will be replaced by a new formula. The new formula is to take the 48 top earners in the six selected professions and to use the median point of the income as a benchmark. The ministers' salaries will be pegged at two-thirds of the benchmark. Compared to the existing formula, this is an improvement. This shows that the Government is prepared to review the agreed formula to suit new circumstances. There is one common characteristic in these two formulae - the discounting factor. Now, we are using two-thirds. Should it be lower or higher? A decision has to be made. Deputy Prime Minister has surfaced this new formula for us to discuss. I feel that there should be flexibility in the formula, so that even in changed circumstances, it can be adjusted and be accepted by most people. Of course, this is not the best time to raise the issue of pay increases for Ministers and civil servants. This is because the cut in employers' CPF contributions has not been fully restored yet and there have been increases in utility charges, taxi fares, etc of late. So a lot of effort has to be made to convince the people to accept this. Sir, in this connection, I hope that the Government will pay special attention to the following matters. Firstly is wage cost. Will the pay increases result in a chain reaction that triggers off an escalation in the private sector's salaries? If wage cost is increased, will our competitiveness be eroded? Secondly, will this result in a chain of price increases and push up inflation? Thirdly, I hope that the Government will continue with the asset enhancement programmes so that all Singaporeans will be able to enjoy the fruits of our economic success.

(In Mandarin): Mr Speaker, Sir, the principle of pegging Ministers' and top civil servants' pay to that of the top earners in the private sector was debated in this House in 1994. My stand on the matter remains unchanged. I do not agree with the principle in the White Paper. In my opinion, those who decide to take up politics and those who decide to earn more money for themselves are two distinctly different categories of people. If you want to peg the pay of political appointees like Ministers, Ministers of State, etc., to the top earners in the private sector, and say that without doing so, you would not be able to attract suitable talents into politics is virtually degrading the politicians' noble spirit of serving the nation and serving the people. It is said that times have changed. We should be more realistic and look at this issue from the point of view of market economy. But we all know that governing a country with the national resources as its backing and doing business with one's private capital are two different things altogether. The private sector faces market competition, even competition in the international market. Among the top earners in the private sector, some are owners of enterprises and some are salaried employees. But do not forget that even world-class banks can collapse and close down! The PAP Government does not own Singapore, neither are the Ministers' salaried employees. They rule the country on a mandate given to them by the people after a general election. Once they are in power, they can put to use the assets of the State. They enjoy great power to decide everything. They can also formulate and implement all sorts of policies to ensure that they can be returned safely at the next general election. In Singapore, competition in the election market is very limited. As such, although both can be described as markets, there is a vast difference between them. Since the electors in Singapore have elected the PAP to form the Government to rule the country, the PAP Government can decide how much their Ministers are worth. Is it asking for the sky? It is left to the people to judge. Actually, the Government does not have to go through all the trouble, using all kinds of computation methods to peg the Ministers' salaries to the top earners in the private sector, just to justify the amounts they are asking for. There is no need to use the income of the top 24 or top 48 earners in the country as a benchmark to calculate the Ministers' salaries. They might as well put it in a simple and straightforward manner and say the Ministers need to be paid how many hundreds of thousands of dollars a month, otherwise the Ministers would not have enough money to use! In the case of the civil servants' salaries, I believe there is just a very small number of senior civil servants who are going to receive substantial pay rise in this exercise. Thanks to the Ministers, they are given these pay increases to avoid having a big gap between their salaries and those of the Ministers, lest it may be difficult for the Cabinet to account for it. The Government says that it is transparent and the Ministers' salary system is also transparent. But the information provided by the Deputy Prime Minister in Parliament yesterday was not transparent enough. May I ask whether the Ministers' salaries as reflected in Handout 2 are only the basic salaries under the Ministers' salary system? I would like to request the Deputy Prime Minister to disclose the full information on the gross salaries of the political office-holders and the civil servants of the various grades, including the various variable components, bonuses and other allowances payable to them. Mr Speaker, Sir, we must not forget that the people of Singapore are paying a high price to engage this batch of talents to become Ministers. We sincerely hope that the return received by the people will not be mere peanuts.

Sir, I am much obliged to you for allowing me to join in the debate. Yesterday, we debated on the disparity of incomes of Singaporeans. The lowest 10% of our workers were reported to be earning as low as $133 a month. The Minister said that the Straits Times had made a mistake in its report. Assuming that there were mistakes in that report and we correct it by doubling the reported wage of $133 to $266 a month, then rounding it off to $300 a month. Even at $300 a month, that is a very low income. A man can barely survive on $300 a month these days. Sir, I am certain that Ministers must be aware that there are Singaporeans who are barely scraping the bottom of the barrel to make a living. Does it not prick their conscience then when they themselves ask for high salaries at over a million dollars a year? If we take the average worker's wages at $2,000 a month or $24,000 a year, and the Minister's salary at $1.4 million a year, then the Minister is earning something like 60 times more than an average worker in Singapore. It means that for a Minister to work for one year, the average worker in Singapore has to slog for his lifetime for 60 years. This, to me, somehow does not look right. Ministers are supposed to be servants of the people. They are to take care of the people and to give public service to lead the people, particularly by example. How can our Ministers have the moral authority when they take their posts purely on the profit motive by asking such high salaries? At the moment, our Ministers are paid the highest salaries in the world, more than Presidents, Prime Ministers and Ministers of other bigger and richer countries than Singapore. In America, President Clinton is paid about S$630,000 a year, half of what our Ministers get and one-third of that of our Prime Minister. I believe the work of the President of the United States is definitely more difficult and more onerous than that of any of the Ministers and Prime Minister in Singapore. Yet, they can live quite comfortably on a much lower salary than our Ministers and Prime Minister. It is not that America is poorer than Singapore. It is not that it is unable to pay its President well. If they wanted to, the Americans can afford to pay their President three or even four times more than the Prime Minister in Singapore. They certainly can afford to do so, since it is the richest country in the world. In fact, a few of the American companies earn more money a year than the whole of Singapore. Yet, the Americans choose not to pay the President and their Ministers high salaries. The question is: why do Americans choose not to pay their President and the Ministers high salaries, as Singapore is doing? The reason is that the Americans feel that those who aspire to take up public office must have an element of sacrifice. It must be seen that those who take up public office are there to serve the public, and not to make a profit out of that office. The President and his Ministers will then have the moral authority to lead. They are basically there to serve the people and not to make money out of their office. I think the Americans are right on that point. We must not scoff at American values. That country has not only survived over 200 years, over two world wars, but has become the most powerful and the richest nation in the world. There must be something that we can learn from the Americans in regard to the way they reward their President and their Ministers. I hope Singapore and its Ministers shall take note of that. I am not envious of the high salaries paid to the Ministers. My concern is more for the future of Singapore. What sort of values should we set for young Singaporeans? On the one hand, leaders of Singapore urge the people to be more communitarian and not to be so self-centred, individualistic and care only for oneself. But, on the other hand, where the Ministers' salaries are concerned, they do not believe in the communitarian way. The Ministers want their salaries to be pegged to the private sector's high earners. The private sector's motivation is on profit. Private sector earnings and level of salaries are entirely based on profit and earnings. Whereas on the part of Ministers, their motivation is not profit orientated but on nation building. The Ministers then should not be asking for salaries based on high earners in the private sector, but should be based on other principles. I think the fairest way is to ask how much a Minister needs to have a comfortable life. In the debate on the White Paper on Ministers' salaries in 1994, I told the House that I estimated that about $50,000 a month should give a Minister a comfortable living - a bungalow house, servants, two motorcars and with a chauffeur, annual holidays and children's education. I note that NMP Walter Woon in the same debate also proposed a similar figure of about $50,000 a month or $600,000 a year. He said that could be a base on which the Ministers could work. I tend to agree with Dr Woon. I think that as long as the Ministers are given a dignified comfortable standard of living that should be enough. That should be the criterion. We cannot factor in the profit element. The profit element is a private sector practice and should not be followed because the Ministers are not running a private company. They are running a country, a nation, hopefully, in our case. They are leaders of the people and they should lead by example. If our leaders show our people that they are there in public positions and claim for themselves huge profits, the wrong signals shall definitely be sent to all Singaporeans, including our young Singaporeans. They shall become cynical and the only thing that concerns them is money. In fact, if money is the only motivation why one does a certain job, that person shall not do that job well. Look at the great achievers in the world. When asked why they take on that job or do that thing which they are good at, the answers are inevitably not the great amount of money they can earn, but the love of their job or the things they are doing. For example, when Michael Chang and Boris Becker, world famous tennis players from America and Germany respectively, were asked why they devote their lives to playing tennis, they said that they love the game and not the millions of dollars they can earn or have earned. Similarly, if Ministers really love their job and want to serve the people well, they should not be asking for high salaries. By asking for high salaries, they are giving wrong signals to Singaporeans that they do not love their job but for the huge profits that they can earn. Speakers in this debate and the debate on the White Paper in 1994 had commented on the unfairness of pegging the Ministers' salaries to the six highest earners in a selected group of professions in the private sector. The reason mainly is that the private sector of the same group of persons may not be drawing the same salaries in the following year and also that they are taking bigger risks. A more equitable method is to peg our Ministers' salaries to the world leaders of other countries. A good example is to take the President of the United States as a base for which we can work on. I do not think that our Ministers will complain on that. We should compare the salaries paid to those in the public service in Singapore to those in the public service of other renowned countries and not compare the public sector salary with those in the private sector. The public sector and the private sector cannot be compared because the two are motivated by completely different reasons. One is for public good and the other is purely for profit. The two cannot be reconciled. Therefore, public sector salaries cannot use the private sector salaries as a benchmark. I had read a report in the Hansard where Members of Parliament in England were debating on the increase of Members' allowances. Almost each of the Members there who rose to speak began by saying how embarrassed they were on speaking of the increase of their own remuneration. It can be seen from that debate in England that the values of the English parliamentarians are different from those in Singapore. Over in England, the parliamentarians there were terribly embarrassed when they were speaking on the increase of their own pay. One notes that it is not so in Singapore. The Ministers in Singapore have affirmed confidently that they have a right to be paid the proposed high salaries and are not a bit embarrassed by it. This is an observation I note in the difference of attitudes and values between the Singapore Parliament and the English Parliament. In conclusion, I would just like to state what I heard last night at my meet-the-people session. One grassroots member, on hearing the revision of the Ministers' salaries, said, "Wow, can buy a house every year." Another remarked, "Just like striking a lottery each year."

Mr Speaker, Sir, Singapore is not the United States. The US has a population of 280 million people. We only have a population of three million. The US is a huge country. We are just a little red dot. So running Singapore, I believe, is much more hazardous and difficult than running the United States. In Singapore, people will require a good government much more than the Americans will require a good government. If the Government does not run Singapore well, the whole country can disappear. In 1966, the Government sent me to study Development Economics in Williams College in the US. It was a special course for officials from developing countries. I was then a young officer working in the Economic Planning Unit. My class of 20 came from 16 different countries in Asia, Africa, Latin America and southern Europe. We were taught theories of economic development, quantitative programming and other useful subjects. But what we were not taught was the importance of good government as a pre-condition for sustained economic development. This was assumed. But alas, it was an assumption that did not hold true for most of the countries represented in my class. What has happened to these countries since then is instructive. For example, three of the countries have broken up - Pakistan, Ethiopia and Yugoslavia. Nine countries have experienced civil wars, social upheavals or violent changes of government at some stage in the last 35 years - Philippines, India, Egypt, Uganda, Liberia, Mexico, Colombia, Bolivia and Honduras. That leaves only four countries out of the 16 represented in my class without severe political and social upheavals - Kenya, Tanzania, Malaysia and Singapore. Kenya and Tanzania are not exactly models of economic growth. If I were to do a Ph.D, I would study the relationship between economic development and the quality of government. Empirically, there is clearly a close correlation between the economic performance of a country and the quality of its government. The more competent the government, the higher the economic growth of the country when measured over a long period of time. There are, of course, other reasons why some countries do better than others, why their economies grow faster, why their people enjoy a higher standard of living, and why they have peace and stability. These include a country's natural resources, its location, and its people. All these are important factors no doubt, but I believe my Ph.D thesis will conclude that the most important factor behind a country's economic performance and the standard of living it can provide its people, is the quality of the political leaders. There is much wisdom in an old saying that an army of sheep led by a lion is stronger than an army of lions led by a sheep. The former will function as an effective unit. The latter will end up with the lions fighting amongst themselves and the sheep being eaten. People are no different. They have to be led. A people led by a superior government can produce exceptional results. On the other hand, an able people led by a mediocre government will underperform. Worse, if they are led by a fanatical government which fears being challenged, clever people might even lose their heads. Cambodia is a tragic example. Pol Pot and his Khmer Rouge killed off millions of their own people. Uganda is another example. Under Idi Amin, it lost many of its talents. My friend from Williams College, a native Ugandan, had to flee the country. Ugandans of Indian origin who ran the economy were chased out. Today, 21 years after the end of Idi Amin's reign, Uganda is still suffering from his misrule. India has millions of talented people. Silicon Valley is full of Indians. Indian Singaporeans have contributed significantly to our development. Yet India remains a poor country. It is weighed down by a bureaucratic leadership that prevents India from performing to its full potential. I believe that India is capable of achieving much more. When I was in India in January this year, I put this question to several Indian leaders when we discussed the importance of talents. To what extent of its potential is India performing today? Their estimate was 30 to 40 percent. Good Government Different people will have different definitions of a good government. My own criteria for a good government are: (1) It must be honest, fair and just. (2) It must be capable of forging national consensus and social cohesion, and willing to take painful decisions for the overall good. (3) It must be able to anticipate the future to head off problems and be nimble enough to adapt and seize opportunities when circumstances change. In times of crises, it must be resourceful enough to overcome them. And, (4) It must be able to improve the standard of living of its people, maximize their potential and involve them in building a better society. I have led this Government for 10 years now. How it has performed is for you to judge, by my criteria or by whatever criteria you choose. In particular, scrutinize our performance in the last five years from the time we argued in this House that Ministers and civil servants must be paid market-based wages. Has the performance of my Government justified its wage? Compare the salaries of Ministers and senior civil servants with the benefits you receive from having a good government. Look at it from the viewpoint of results, that is, the value of output and not the cost of inputs alone. It is the results which are important. What you get out of it, not the cost of inputs alone. Has my Government given you "safe homes, stable jobs and fuel to dream of all the tomorrows?", as a member of the public put it. She wrote to express her appreciation for my "keeping the country well oiled and well run". "Safe homes, stable jobs and fuel to dream of all the tomorrows?" You might not have systematically evaluated the performance of the Singapore Government, but many international consultancies have. I would like to refer to some of these professional third-party evaluations, not to blow our trumpets, but to underline the value of a good government. First, Singapore's economic competitiveness. This year, for the seventh year running, the International Institute for Management Development in its annual World Competitiveness Yearbook ranked Singapore the world's second most competitive economy after the US. Another think-tank, the World Economic Forum, thinks we have done better. In its 1999 Global Competitiveness Report, it ranked Singapore as the world's most competitive economy for the fourth year in a row. Both analyses regard the effectiveness of government policies as a key factor contributing to the overall competitiveness of a country. In the World Competitiveness Yearbook, Singapore came out first on the extent to which government policies are conducive to competitiveness. In the Global Competitiveness Yearbook, Singapore was also ranked first in many areas of government, including economic policies and public sector competence. The Straits Times and Zaobao recently carried a survey by the Political and Economic Risk Consultancy (PERC) on the quality of various Asian governments. The report by PERC showed Singapore to have the best quality of political leadership among the major economies of Asia. Singapore's economic policies were also deemed to be the most effective. The PERC report said, "A nation's per capita GDP is a good example of the effectiveness of a particular government's economic policies." It goes on to say that if it were to go back fifty years and pick those countries of Asia which would be dominant economies today, Singapore would have been considered an economic backwater compared to places such as Manila. But Marcos rode the Philippine economy into the ground, whereas Senior Minister guided Singapore to our achievements today in an "amazingly short period of time." Another PERC-produced report in March, Asian Intelligence, also reported that its respondents had "consistently rated Singapore as having one of the best bureaucracies in the region" and that "Singapore is widely regarded as a place where things get done, and get done efficiently." But it is not only in the area of economic policy that international analysts have rated the Singapore Government highly. In "The Economic Freedom of the World: 2000 Annual Report", published by the CATO Institute in Washington DC and Canada's Fraser Institute, Singapore scored full marks for its legal structure and property rights. In PERC's Comparative Country Risk Report 2000, Singapore's judicial system maintained its top position in Asia. PERC commented, "Singapore's legal system has an excellent reputation among businessmen for being fair and effective, if a bit harsh at times." More recently, Lord Woolf, one of Britain's most senior judges, was so impressed by the smooth functioning of the Singapore judiciary that he wished the courts in his country would follow some of the processes here. In the area of health, the World Health Organisation earlier this month assessed Singapore to have the world's sixth best performing health care system among 191 member states surveyed. Our education system has also come in for praise from foreign experts. US Education Secretary Richard Riley, when he was in Singapore recently for the APEC Education Ministerial Meeting, commented that there was a lot the US could learn from Singapore's education system. In the third and latest International Mathematics and Science Study some years ago, Singapore's 13-year olds came in first among 41 countries in their ability in science and mathematics. This is clear testimony of the effectiveness of our education system. Some US schools are even using our mathematics textbooks. These are but a sampling of the international assessments of the performance of Singapore and the Singapore Government. Singaporeans by now take all these assessments and high rankings for granted. But pause for a moment and ask yourself how we have managed to achieve first world standards in so short a time and with so little resources. Could it have been done without leaders of integrity, ability and dedication to the people they serve? Test of Government The true strength of a government is revealed when it is put through the most severe crisis. This Government has been put through one in the recent Asian financial crisis. The financial storm devastated the economies of South Korea, Thailand, Indonesia and Malaysia, but left Singapore relatively unscathed. Just consider the damage to these economies in 1998. South Korea's economy shrank by 6.7%. Thailand's economy shrank by 10.2%, Malaysia's by 7.4%, and Indonesia's by a massive 13%. In contrast, Singapore avoided a contraction in 1998. Our economy still grew, if only by 0.4%. Suppose we had not managed our economy well. It could easily have shrunk by 5%. This would have taken off $9.5 billion (at current prices) from our GDP. Divide this by a population of 3 million and you will get a loss of $3,166 per person. This is an indication of the price each Singaporean pays if we had not managed our economy well. In contrast, what was the total annual salary for all political office-holders in 1998? About $28 million. What is the total salary increase we are proposing for political office-holders? About $6 million. With the salary revision, the annual salaries of all political office-holders, that is my Government, will rise from $28 million currently to $34 million. Is this a lot of money when compared with the $9.5 billion damage to the economy that could have been inflicted by the Asian financial crisis? Is $34 million a lot of money when they amount to only 0.024% of our GDP of $144 billion (at current prices)? Let me put it simply: the damage we had prevented to the economy from the Asian financial crisis is more than enough to pay the Ministers and the other political office-holders for the rest of their political lives and in fact over many lifetimes! The Asian financial crisis has distinguished us from the other regional economies. Recently, an American asked the US Ambassador to Singapore, Mr Steven Green, on the Internet: "Why was Singapore affected less than the region during the economic crisis?" His reply: "In one word, it is management. Singaporeans are very fortunate to have a government that is very well-managed, very far-sighted and willing to embrace change." Foreign governments and investors have noted our strengths in the crisis. Our ability to withstand the crisis has increased confidence in Singapore. This is obvious from my many meetings with foreign investors and leaders both in Singapore and abroad. We are going to see more foreign investments come in. This means more jobs and better jobs. Let us put the salaries of Ministers in their proper perspective. A million dollars for a Minister seems a lot when compared to the salary of a worker. But $34 million for all the Ministers and political office-holders, that is the cost of government, is a tiny drop when compared to the increase in GDP that a good government can produce. For every 1% growth, the GDP increases by $1.4 billion. Good People for Good Government So how do we produce a good government? Get the best to serve the country. A good government does not come naturally. It must be systematically created through the active recruitment of good and able people. You cannot just leave it to the electoral process to throw up a good government. If the present ruling party is not able to persuade some of the best people to enter politics, you will have only weak men and women to choose from to form a government. After every election, we immediately look for new candidates for the next election (we do not wait until the election is about to come) - from the civil service, SAF, Police, statutory boards, GLCs, the professions and the private sector. In other words, all over Singapore. Since the last GE, we have already invited nearly 250 Singaporeans in their late 20s to mid-40s for tea sessions. By the time of the next GE, we would have met 400 to 500 potential candidates. Out of them, we hope to find 15 to 20 with these 5 "Cs" qualities. These are the 5 "Cs" which a potential candidate must have (not your usual 5 "Cs" but my 5 "Cs"): (1) Capability: Does he have a record of good performance? Does he have the potential to become an office-holder? Does he have good judgment? Does he have leadership qualities? (2) Character: Does he have character flaws? Is he able to get on with people and motivate them? (3) Compassion: Has he done things for others beyond his own family? Does he care for others? (4) Conviction: What does he believe in? What does he want to achieve in life? What motivates him? Why does he want to be an MP or a Minister? (5) Commitment: Is he loyal to his friends? Will he stay the course? Will he fight when the chips are down? If we assess that a person is interested only in politics as a career move, he will not be chosen as a candidate. If he is attracted only by the pay, he will not be selected as a Minister. But that does not mean we should not pay a Minister what he is worth. We are targeting the top people to be Ministers. They are high-income earners or will be in their non-political careers. We will have to pay them a competitive, market-based salary so that pay will not be an obstacle discouraging them from entering politics. Professor Joseph Nye, Dean of the Kennedy School of Government at Harvard University, made the same point in a talk in Singapore last year. He said: "Singapore is very wise. You need to attract good people into government, and paying high salaries reduces the incentive for corruption."

On his point on corruption, Singapore's policy of paying our public officials market-based wages has helped us create a corruption-free environment. Transparency International, an NGO dedicated to fighting corruption worldwide, has consistently ranked Singapore within the top ten least corrupt countries in the world, since its index was first published in 1995. Among Asian countries, we are rated the least corrupt. Professor Nye added that the high salaries also helped "lateral entries" from the private sector into government. He said that this was important in a modern economy with a complex, fast-paced financial sector, as government decision-makers would need the inputs of private sector practitioners. Professor Nye was right about lateral transfers. When we identify a suitable young man (or woman) with the potential to be a Minister, we have to persuade him to give up his bright prospects in the private sector for an uncertain future in politics. Benchmarking Ministers' salaries to what the best in the private sector earns, makes it easier for us to get some of the best people to become Ministers. Some may argue that you do not have to pay so much to get people to join the public sector or become Ministers, and that there will always be people who want to become Ministers or civil servants. Quite right, if you think in terms of quantity, not quality. The Economist in an article in its issue of 8th May 1999 on "The Politics of Envy" asked: "Why do governments systematically underpay their top people?" And answered that it is the tendency to think in terms of quantity, not quality. Andrew Oswald, an economist at Warwick University, was quoted in the same article: "Governments can set low pay and still get workers. It is the quality that will adjust. I doubt whether western democracies have fully grasped this. Governments still tend to count the warm bodies applying for occupations." But not this Government. It goes for quality, not merely warm bodies, and certainly not seat-warmers. That is why we have performance bonuses for political office-holders, one of the few countries in the world to do so. Ministers are paid in accordance with their performance. I shall now ask the Clerk of Parliament to hand out a table (Cols. 629-630) showing the distribution of performance bonus received by political office-holders. [Copies of table distributed to hon. Members.] This is to answer the point raised by Mr Inderjit Singh that the performance of office-holders should be properly evaluated (Table 1). From the Table, you will see that only three Ministers received performance bonus of more than four months, and the most number of Ministers was in the 3-4 months category. We have been stringent with our evaluation. The office-holders were given similar tables at the time they received their performance bonus. So they knew how they have been evaluated. Table - Performance Bonus Distribution for Political Office-holders (Cols. 629-630) We also insist on self-renewal. MPs and Ministers, even though they are performing well, will at the right time, have to make way for younger people. In future, Permanent Secretaries too, even if they are good, will have to make way for younger people. Otherwise, younger people with high potential will not stay long enough to become Permanent Secretaries. Timing of Salary Revision Some MPs have told me that while they support the salary revision for the public sector, they are concerned about the timing because the CPF cut has not yet been fully restored. There are two reasons why we are proceeding with the salary revision now. First, in November 1994, when we debated the White Paper on Competitive Salaries for Competent and Honest Government, we said that the salary benchmarks would be reviewed in five years' time. Second, the gap between private sector and public sector pay has become a gulf since the start of the Asian financial crisis. This is because the Government froze the salaries of Ministers and top civil servants during the crisis. This was despite the fact that the salaries were due for upward revision. For example, the private sector benchmark for Ministers' salaries at Staff Grade 1 had increased by 13% in 1998 and 29% in 1999. Not to adjust the Ministers' and civil servants' pay now when we have emerged from the crisis and resumed strong growth, and especially when it is fully justified by the private sector benchmarks, is to fall into a state of paralysis experienced by governments elsewhere when they faced the issue of public sector pay revision. Because they were unable to keep the salaries competitive vis-a-vis the private sector, inevitably, their countries saw a decline in the quality of people wanting to be MPs, Ministers, judges and civil servants. We are not, however, insensitive to workers' feelings and public sentiments. Because the CPF cut has not been fully restored, we are not restoring immediately the pay of Ministers and top civil servants to the private sector benchmark for Staff Grade I, but phasing it in over three years. These office-holders will receive only 80% of the benchmark in the first year. The basic monthly salary for Ministers will therefore increase by only 0.3% this year. With bonuses, the annual increase for Ministers will be a modest 12%. Today's Realities In debating the salary revisions, let me remind you of some realities we cannot run away from. First, we are seeing a global convergence in the pay of top executives. Globalisation and technological advances in transportation and communication have led to increasing mobility of this group of people. They are able to move easily around the world in search of the best employment opportunities. If they do not get internationally competitive remuneration in their country, they can easily uproot for other more favourable opportunities in another country. Companies are therefore increasingly pressured to pay internationally competitive salaries for top executives, regardless in which country they operate. Second, our job of retaining talents is made more difficult because Singaporeans, with their proficiency in English and high competence, are mobile and in great international demand. American universities and MNCs regularly cream off our scholars and bright students who study in the US. Third, we must make a rapid transition to a knowledge-based economy. We have done the easier parts like building infrastructure, putting in place a business-friendly environment, and training our workers for skilled jobs. The next phase is much more difficult. We have to create new products and services ourselves and not merely add value to other people's products. With globalization and the IT revolution, competition has heightened. It is a new ball game altogether. Overall, what all this means is that the wages of top private sector talents in Singapore will face significant upward pressure in the years to come. Companies in Singapore will have to pay their top local executives internationally competitive salaries to retain them. Certainly, they have to pay internationally competitive salaries for foreign talents. But let me add here that expatriates are excluded from the calculation of the salary benchmarks. The Government has no choice but to match these upward trends in private sector pay in order to attract its fair share of talents. But the Government does not intend to be a price-setter. It will not lead the pace of pay revision in Singapore. It will only be a price-taker. We will only respond to the trends in the private sector, with a lag of one year, to ensure that public sector pay remains competitive. Another reality we cannot escape from is the widening income gap between the top and bottom earners. In every society, there will be a bottom 10% and a top 10% of wage earners. The Government cannot artificially reduce the income gap between these two segments of the population by forcing upwards the salaries of the bottom 10%, or forcing downwards the salaries of the top 10%. This is a market economy, not a command economy. What the Government will do, however, is to ensure that all Singaporeans have an equal opportunity to make it to the top 10%. At the same time, we will help the relatively poor to ensure that they also benefit from the general increase in prosperity. The Government has already put in place a system of subsidies for education, housing and health. It has also implemented several assets-enhancement programmes. We will continue to help the lower-income Singaporeans increase their assets, as well as improve their earning capacity through training and skills upgrading. We will give them hope through investments in their children's education and future. Conclusion As Prime Minister, I have travelled widely and seen many governments at work. Our Ministers can stand their own against most of their counterparts elsewhere. We have a Cabinet Singapore can be proud of. My most urgent job now is to make sure that there will be a successor team which can manage Singapore's complex economy in an increasingly competitive global environment, and which also understands the concerns of the man-in-the-street. I can build up this team only if we are able to persuade good men and women into politics. The difficulty here is that a political career is not the natural or first choice of most able Singaporeans. Other major advanced countries too, like the US, face the same problem. We have to overcome this problem. Singapore has left behind the revolutionary stage where leaders emerged to lead a historic movement with little thought of pay. We are in a steady state of development where fortunes can be made in the buzz of the private sector. There is much excitement in the new world of dotcoms, financial services, life sciences and R&D. Most able Singaporeans prefer to seek fulfilment in these challenges rather than in politics. If we fail to get a group of these bright, able and honest Singaporeans to form the political core of Singapore, then over time, the standard of government will go down, and Singapore will crumble. Singapore is vulnerable. It does not have any natural resources except our people. Our people have been fortunate to be led by a good and competent Government since 1959. It will be very shortsighted and costly for Singaporeans if we grudge good Ministers their due, and settle for lesser men in Government in the future. I have gone through the proposed revisions to public sector salaries and salary benchmarks thoroughly. I am satisfied that they are fair. I do not think they are generous, given the Ministers' huge responsibilities and impact on our people's lives. I want the right people to do these jobs. And so should you. That Ministers' pay is a source of envy for some people is not necessarily bad. We are more likely to recruit good Ministers this way. I would be extremely worried if it were the reverse. If Ministers envy the pay of their counterparts in the private sector, that is the first step towards corruption. Several MPs have advised me that we must deal with the emotional reaction of Singaporeans over the salary revision. They themselves support the market-based salaries but are concerned that the man-in-the-street will not understand why Ministers have to be paid high salaries. I understand these emotions. But I have faith in the judgment and rationality of Singaporeans. I have no doubt that some Singaporeans will react emotionally and will not accept our arguments. But I believe most Singaporeans will listen to the logic and make a rational decision. They have always done so. A rational and practical approach to problems has always been Singapore's hallmark. Otherwise, Singapore will not be where it is today. To conclude, let me go back to my Williams College days. I have often wondered what has happened to my classmates. What has happened to my Ethiopian friend, who already had six children at Williams College? He was a high official in the government of the late deposed Emperor Haile Selassie. As for my Yugoslav friend from Croatia, I wonder whether his children had to fight fellow Yugoslavs to become Croatians? What about the Pakistani official from East Pakistan who became a Bangladeshi? His government house overlooking the port of Chittagong was shelled during the war. Fortunately, there were other classmates who have done well, retiring in high government positions. But their countries have not lived up to their dreams when they were young men at Williams College, eager to learn and eager to put into practice what they had learnt. The real lesson for me from Williams College was: without a good government, all the good theories of economic development count for nothing. Countries with weak or bad governments will go downhill, suffer internal strife and may even break up. They will not be able to deliver a high standard of living for their people. And when a country goes down, it is not the able people who will suffer most. It is the man-in-the-street. They are the people who cannot migrate easily. They are the ones who need a good government most. So ask yourself, "Where will Singapore be 30 years from now? What type of government will produce you a safe, stable and prosperous Singapore?" Let me help you answer the questions by giving you some simple arithmetic. First, the wage cost of all the political office-holders will be $34 million after this pay revision. There are three million Singaporeans. What is the cost of Government per capita? $11 per year or about five plates of "char kway teow" per Singaporean. Second, in 1995, the Government made a contribution of $200 into the CPF account of all Singaporeans aged 21 and above and an additional pro-rated contribution of up to $300 to those who had contributed $750 themselves to their CPF account. The total amount paid out was about $800 million. What was the pay-out per Singaporean? $270, if we divide it by a population of three million. We can do more such CPF top-ups in future, provided we have good growth. $11 per capita per year for a Government that can produce good economic growth and give you $270, even if it is once in five years, is surely good value for money. Summing up, it is wrong to focus on the individual pay of Ministers in isolation. He is only a member of a team. You should focus on the cost of my Government and the benefits and consequences of having that Government. What is the cost of my Government to each Singaporean? Five plates of "char kway teow"! What was the price each of us would have paid if our economy had shrunk by 5% during the financial crisis? $3,166! And this price is only an example of the huge price you have to pay for a weak or bad government. We have put in place a virtuous cycle of good Government, economic growth and benefits for the people. For your own benefit, it is wise for you to strengthen, not break this cycle. [Applause]

Sir, may I seek a clarification from the Prime Minister?

All right.

Would the Prime Minister also conclude in his proposed thesis that the higher the Ministers are paid, the higher the return in benefit for the people?

Sir, when you do a doctoral thesis, you do not do such a simple correlation that the higher the pay, the more the benefits for the people. You have to look at what the Government can deliver and if you need to have high pay to attract good people into government, then of course, there is a link between that and the per capita GDP. Where you have high pay, and you pay people who do not measure up, then of course your performance cannot increase. So the link is not between the high pay. The link is between good people whom you have to attract with the right pay. In our context, it has to be related to the market, and you see the results later on. What I am saying is, judge this Government in totality for what it has performed. Do not look at individual Ministers' pay alone. Look at the wage cost of Government as a whole, the benefits to you, and the price of a bad government.

Sir, I rise to support the Deputy Prime Minister's statement. Sir, I will not touch on the salary adjustments of the civil servants as I think that is less controversial than the issue of the Ministers' salary which is tied to the public sector salary adjustment. We have had extensive debates before, inside and outside this House, on the issue of the amount that political appointment holders and, in particular, a Minister, should be getting as his salary. Mr Chiam had earlier alluded to the fact that to the average Singaporeans who may not be paid as much, especially to the fair number of Singaporeans who earn less than $24,000 a year, the idea of a Minister getting more than a million dollars is beyond comprehension. At first brush, there seems to be a sense of inequity to this. Somehow, many Singaporeans feel that it is not right that there should be such a divide between the masses and a small number of political elite who, as the people's representatives, should reward themselves so handsomely with such salaries. Sir, against this thinking, there is a sense that the people have made deep sacrifices, as was acknowledged by the Prime Minister earlier, when the Government decided to cut their CPF contribution following the recent financial crisis. Their CPF contribution has not been fully restored to date and there are constant calls for the Government to restore their CPF contribution to the level before the financial crisis. Therefore, for some, it seems odd that while they are making the sacrifices by taking pay cuts, the political appointment holders and civil servants should be increasing their salaries at this time. Many Singaporeans may feel that the Government should continue to set the example, as Mr Chiam had said earlier, by keeping the salary freeze until such time when CPF contribution has been fully restored to the people and the economy shows robust growth again. The Ministerial Statement unfortunately also comes at a time and hot on the heels of the recent spate of announcements of cost increases. These include, for instance, the $2 charge on POSB accounts for those who maintain low deposits, and the recent announcement of revision to water rates, increase in transportation charges, and other private sector led charges. At this moment, we know that the recovery of the Singapore economy is rather selective and not across the board. The construction industry is still in the doldrums and many Singaporeans are still unemployed. At my MPS alone, I get many requests from my constituents for help in looking for jobs. They are the ones who have been retrenched and are not so employable on account of age. Against the backdrop of the present scenario, many Singaporeans may be asking: how can the Government increase the salary of civil servants and political appointment holders? I do not deny, Sir, that the issue of Ministers' salary has always been a very emotive one. For reasons that I shall elaborate later, I support the move by the Government to increase the public sector salary. Let me examine some of the arguments raised against the salary revision. First, as was alluded to by Mr Chiam, the inequity argument, ie, the growing gap in income distribution between the top and bottom income earners and the fact that CPF contribution has not been fully restored. Sir, the argument of social inequity is based on the idea of equal misery for all. The argument simply put is this: as long as there is inequality of income distribution and as long as CPF contribution has not been fully restored, political appointment holders, least of all, should be allowed to have salary revision. Can this argument be tenable? Against this argument, we have to ask ourselves the kind of society we want to build for Singapore. I do not think for a moment that a country founded on a political philosophy of equal misery for all is going to bring about more wealth for the people in the long term. Let us recognise a basic principle here. We are a market economy where talents and resources are allocated on the basis of pricing. You want the best talent, you must be prepared to pay for the best talent; and by talent, I mean not only people with the ability to run the country well but also the honesty and integrity to run it. To the detractors, I have a question. Would you rather pay the political appointment holders a fraction of the salary and have either people without the ability to take charge of our Government and make a mess of Singapore or have people whose only interest in coming to public office is to cream off the system and line their pockets in the process? Let us be honest about it. Talent is in short supply in Singapore. We want to attract the best talents to serve this country. For them, they will have to come out of the comfort zones of their established careers and family for the country. It is indeed a sacrifice for many who have established themselves in their career. They have to make a judgement call by resigning their jobs and serving the country as political appointment holders. We all know that there is no assurance that they will succeed in the long run as political appointment holders, having made the sacrifice. It is therefore quite clear that some sacrifices would be necessary. However, to ask them to make near complete sacrifice or even total sacrifice in the service of the country is a very naive thing to do, Mr Chiam. These people have their mortgages to pay, their children to look after and a certain lifestyle to keep. His calculation of $50,000 is a relative thing. To the very poor in the poorest country in the world, your lifestyle would be obscenely rich. I think it is quite inappropriate to just pluck a figure out of thin air and to say that it is appropriate by your standard and your judgement. Let the person who is deemed by the power that be, who is capable of running this country, decide whether or not it is a sacrifice that is worth making and paying at the point in time. The answer to the call to political office to serve the country is not a call to priesthood. They are not expected to live the life of an ascetic. Even in Israel, where the country has for years had prime ministers who lived rather ascetic lives, has had to face down two major scandals recently, when their President and former Prime Minister came under investigation on allegations of corruption. If a salary adjustment is in order, and having lived with a wage freeze for the last three years, why should we begrudge this adjustment? We are not a basket case where our people live from hand to mouth. We can afford the salary increase and we want to continue to have people at the top who will be able to give all of us, and not just some Singaporeans, a better life in the new economy. We had a discussion earlier about the issue of growing income disparity between the poor and the rich in Singapore. The question that we have to ask ourselves is whether we want to pay the right people at the top to continue to create wealth for Singapore and to close the income gap in the process. If the answer is yes, should we not be willing to pay the price? The Prime Minister has given us a very lucid illustration earlier and I think the example is very telling. Secondly, some Singaporeans, I suspect, may well support the pay increase but would say that it is inappropriate to implement this at this stage with the recent spate of price increases. Sir, with all due respect, I do not think that the two issues are necessarily related. What this argument is tantamount to saying is that because there are price increases, political appointees must not have salary adjustments. Why should the political appointment holders be any different? Are the promoters of this argument saying that wages for all employees should be frozen? Quite clearly, Sir, the argument is non-sequitur. Finally, I have heard the argument making its rounds that the political appointment holder who is paid the equivalent of private sector salary may not be able to hold his own in the private sector once he leaves the comfort zone of the public service. This applies to political appointment holders who have never worked in the private sector before. Again, I find this argument rather difficult to follow. Sir, I believe that we have used the salaries of the private sector as a benchmark to allow us to (1) attract and keep those from the private sector with the necessary ability to serve the country; and, more importantly, (2) to recognise the ability and contribution of political appointment holders who have led the country well. It is the cynicism of some Singaporeans on the ability of our political leaders who never really went through the baptism of fire in the private sector that I want to touch on briefly for now. The argument is simply this. We pay Ministers top private sector salaries. Can they really perform to the level of expectation required of the remuneration that they enjoy if they went to the private sector? In other words, would they have earned as much if they actually took on private sector jobs? Sir, I believe that to take this line of argument is to confuse the issue. Let me explain. I am a solicitor and I earn an income. I should not be expected to earn the same salary as a doctor if I tried to do the work of a doctor. This is because I am not qualified and, more importantly, may not be suited for the job. The two are not the same. I am paid my salary which may be comparable to a doctor's salary because of what I do as a lawyer. Nobody begrudges the fact that I earn as much as a doctor. By the same token, we use the private sector salary as a benchmark. That does not mean that we should expect all political appointment holders to have the same talent to be a top doctor, lawyer or a banker. What the benchmark does in addition is to provide a basis for valuing the ability of those in the public service. Why should they be valued any less simply because they are in the public sector? Clearly, this approach to pay our public office appointment holders well has been proven right, as was mentioned earlier, because the last round of financial crisis has spared this country of the misery that we have seen in the region. Is this not proof of the quality of the leaders that we have? In other words, the benchmark is arguably our way of remunerating them for the quality of skills that they have brought about in running this country. At the end of the day, Sir, we have to ask ourselves: are we prepared to pay the price for top leadership? Is it worth it? I would say that at least for us, the system is transparent and it is worth every cent of it. We know how much we are paying our public servants; or do we want a system where political appointment holders are paid little, and the true cost of leadership is not known until perhaps the leaders fall and corruption investigations begin? Sir, to my mind, the answer is obvious.

Order. I suspend the Sitting and will take the Chair again at 3.40 pm. Sitting accordingly suspended at 3.17 pm until 3.40 pm.

Sitting resumed at 3.40 pm

Debate resumed.

(In Mandarin): Mr Speaker, Sir, I support the pay revision for civil servants tabled by DPM Lee. This is done in order to maintain, strengthen and continue the system that has stood us in good stead. In the past few decades, our system has brought about an improvement in the quality of life of our people. Ours is an open, transparent system which practises meritocracy. Under this system, our leaders are not allowed to abuse their powers and to amass a great amount of wealth for themselves. Unlike other countries where greed and corruption have become rife and rampant, in Singapore, there is no room for money politics and Ministers do not have dubious extra benefits. It is pragmatic to link Ministers' pay with those top earners in the private sector as their salaries should not lag far behind those top earners in the private sector. We should attract the most capable and talented people to come forward to join the Government by ensuring that their salaries should not lag far too behind those of their friends in the private sector. We must attract the best and the most competent to enter politics. Of course, they should not be motivated by greed. They should come out spontaneously to take part in the process of renewal of our political leadership. After the pay revision, our Prime Minister's pay is $1.94 million, which is equivalent to the pay of the 63rd top earner in the private sector. Prime Minister Goh and his team have led the people through the financial crisis and they have been able to turn a deficit of $5.1 billion into a surplus of S$3.2 billion. The Prime Minister's yearly remuneration of $1.94 million is about 50 cents for each of the 4 million people. This is the negligible amount they have to pay to hire a helmsman. Is 50 cents too high a price to pay? Of course, we can each pay 10 cents a year to get a helmsman, but that helmsman is a helmsman of a tongkang or a sampan. And a sampan or tongkang cannot carry four million people. When I re-read Senior Minister Lee's Memoirs, my belief in the importance of good Government leaders is further enhanced. From the time we entered Malaysia and the time we were separated from it, if not for the Senior Minister's wisdom and sharp political judgment, we would be sitting here today as a city council and not Parliament, and the issues we would be discussing would be to get more financial allocation from the central government or to get loans from the IMF. Mr Speaker, Sir, I am saying all these just to tell the people of Singapore that what we should worry about is not pay increases for the Ministers, but whether we can get the best people to become our leaders and to practise the system of meritocracy. We must retain the best talent in our civil service and Cabinet. If we lose them, it will be a loss to the nation. Of course, of equal importance is that we should not forget those low-income earners who work hard for the nation. In this respect, I am glad to hear Minister BG Yeo once again assuring the House yesterday that the Government would continue to provide affordable housing and healthcare to the lower-income group, and would continue to invest heavily in education and training, thereby ensuring the employability of the workers. A good government will ensure that the children of all Singaporeans, rich or poor, will have equal opportunities to be educated and to be promoted to a better standard of living. Good leaders will make the lower-income people feel, at all times, that whenever they encounter difficulties, the Government would be around to lend them a helping hand. The politics of meritocracy not only enables the top talents to scale the peak but also continues to provide the lower-income people with the hope and the twilight that they and their children will be led to enjoy a better standard of living.

Resolved, That the debate on the Statement made by the Deputy Prime Minister and the remaining items on the Order Paper for today be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Dr Lee Boon Yang].

(In Mandarin): Mr Speaker, Sir, first of all, on behalf of the trade unions, I would like to thank the Government for agreeing to credit the unused portions of the annual $350 cap on outpatient subsidy for civil servants who are on the Medisave and Subsidised Outpatient Treatment (MSO) scheme into the Medisave account of the officers. This is a shot in the arm for the unionists' effort to make our medical benefit more portable, and it is a great encouragement to our unionists and gives them more confidence in making representations to the Government on behalf of the workers to review their welfare and benefits. I support the DPM's proposal for revision of salaries for civil servants. As we enter the 21st century, the nature and model of a global economy are undergoing great changes. This is a vast world with blurred boundaries. Compared to the time when we detached ourselves from the British rule some 40 years ago, the Singapore of today has seen a 70-fold increase in our GDP. We have already attained great achievements in social and economic fields. Recently, the Housing and Development Board handed out the 800,000th key to the owner of a brand new HDB flat. 90% of Singaporeans own their own flats. Even among the bottom 10% of our people, some 65% own their 3-room or bigger HDB flats. Sir, we have read in various literature and newspapers that different people in different regions, irrespective of their races and nationalities, have some common aspirations. They do not want to be dependent on others. They wish to have their own homes. They also hope that their children have education and everybody craves for the country to be prosperous and the people live in peace and harmony. They hope that their children will grow up healthily, live in a safe country and have jobs that provide them with a stable income. Let us take a look at all these hopes and aspirations. We all feel that, as Singaporeans, we should be very proud and happy because many of those things that remain as dreams for the people in many parts of the world have become a reality in Singapore. Most, if not all, of the Singaporeans' dreams have become realities. We must continue to put in our efforts to ensure that our people, especially the younger generation, will continue to enjoy this kind of very good social environment. A friend of mine once told me that there are three types of government in the world. The first type of government consists of those who sit back and depend on their national resources to finance the government's spending and eventually squander away all the national wealth. The second type is a government consisting of people who work very hard to create wealth - for themselves. The third type is a government comprising able people who work hard to create wealth for the country and help the people to enhance their assets and share the fruits of success brought about by the government. We cannot find anywhere on the map of the world any other country like the little red dot of Singapore. Yet, our system and our hardworking people have made us outstanding and different. It is only here in Singapore that we have this kind of transparency to discuss the question of how to implement meritocracy for good government to continue to help the country prosper and develop. What we want in this kind of system of transparency is reward based on merit. Because we do not want to be like many other countries in the world which have fallen into the pit of quicksand of money politics. Neither do we want to be a country using the "little above board and plenty under the table" kind of reward system. As a matter of fact, this kind of transparent salary system for our Ministers and civil servants who have sacrificed a lot, is one which can be described as a "win-win" system for both the Ministers and the masses. As it is often quoted by the Opposition Member, "After all, the wool still comes from the sheep's back." (meaning in the long run, whatever you are given, you pay for it). However, we must stress that if you want to have the wool, you must also ensure that the sheep can grow with good health. Then only will we have the wool to shear. Let me give you another illustration. If a farmer can rear the chickens well, then he will have eggs to harvest, and the better your chicken, the better eggs you will get. If a farmer has developed a special skill to make his chicken produce golden eggs, then the golden eggs should be his rewards. On the contrary, if the farmer cannot rear his chickens well, then he gets only sick or even dead chickens. He can forget about having eggs to eat. There is a Chinese saying that people need food to sustain their lives, while the nation is built upon its people. Our leaders and civil servants have to work very hard to earn their rewards. In Singapore, to become political leaders by itself is a sacrifice. Like doctors and teachers, the political leaders too make their own sacrifices. We should remunerate them well so that they would dedicate themselves to serving the nation and the people, without having to worry about providing for their families and their children. We often say that for lovers in love, they can survive on water and fresh air only. But how long can they survive? If we want our horses to run well, we must feed them well. How can you deny the horses of their feeds, yet expect them to gallop well? We should not inhibit the able and talented people to earn the rewards which they truly deserve. If they are good, pay them handsomely to commensurate with what they are worth. In an open society like Singapore, we should permit "adding flowers to brocade". As a unionist, I feel that while practising "adding flowers to brocade", we should not forget also to "send hot charcoal to the needy during snowy weather". The Government must try and do its best to upgrade the low-income and low-skilled workers so that they too would have the opportunity to upgrade themselves and have a share in the fruits of our economic success. They should be given the necessary assistance in time of need. More importantly, we must ensure that children of every Singaporean, irrespective of their family background, should be given the equal starting point, to receive good education, so that children from the lower-income group will also have the opportunity to get out of the poverty trap. There is a widening income gap among the top earners and bottom earners. There is this V-shape going up all the time. But this is not the problem. The key is whether the Government-employer-employee tripartitism can continuously work together to level up the "V", that is, to continuously push up the bottom line of our incomes. This morning, we conducted a dialogue session with our trade union leaders. All the leaders raised their hands in support of this salary revision. So long as the Government can implement the principles, that is, to ensure that the less fortunate are properly looked after, in other words, we must have a good government so that we can attract investments and create more jobs for the people in Singapore, then we will have a good and stable working environment. The trade unions will support this salary revision. The trade unionists also agree with building the bonus system into the scheme. The AUPE representative hoped that the PSD will further enhance its transparency in the evaluation of public sector employees, especially those who have become trade union leaders. If possible, they will ensure that these trade unionists will not suffer under the scheme. I hope the Government, in revising the salaries of the public sector, will also expedite the work redesign and re-engineering in the public sector so as to further enhance the efficiency of the public service. I hope that the Government will benchmark the bonuses and other incentive awards with our GDP and other development indicators. They must also take into account the social indicators and standard of living of the lower-income group. What we want is a public service that cares, one that does not sacrifice the "human touch" for efficiency.

Mr Speaker, Sir, there are no new arguments for the salary increases. They are obvious. They have been debated thoroughly but it is a popular issue which hits a popular imagination and it is not the norm in other countries to pay the market rate for the job. We have decided to do this and we know - I know and the prime minister knows - that wherever we go, we are greatly envied because they would like to do likewise. They just do not have the political strength. The events of the last five years, since the debate on ministerial salaries working out this formula, have only shown that the formula is a practical method. Otherwise in a fast-changing globalised economy - we would be repeatedly debating the need for salary revisions. Instead, we are now fine-tuning the formula from the average of the top four earners to the top eight earners, in six professions. I have grappled with this problem for over 30 years from 1959 to 1990. I had argued this question of ministerial salaries when I was in the opposition in 1955/56, 45 years ago. I then urged the chief minister of the day, David Marshall, to be realistic. His monthly salary then was a princely sum of $3,500 when as a leading lawyer he was making $10,000 to $20,000 a month. I recommended a realistic pay, appropriate to his earnings. But he did not have the political strength to do it and he left it at $3,500. So it remained until I developed sufficient political standing to be able to tackle the question and raise ministerial salaries in the 1970s when the economy had taken off. Allow me to recount briefly how we managed in the last 40 years since 1959 so that you will understand where did we start, how have we arrived at where we are. As I have said, the first Cabinet was unusual because it consisted of men who had been drawn together by the forces of history. We were young men in our 30s and 40s, who had been through the sufferings of the war and the Japanese Occupation. And we were tempered by that experience. We wanted independence, and were strongly driven to change the economy and our society. My colleagues were outstanding men, a core group that stayed together from the 1950s to the 1980s, when they retired. They provided Singapore with 30 years of stability, solid growth and finally a transformed society. But during that period, every few years I came to this House to revise their salaries to catch up with the fast growth economy and the ever higher salaries in the private sector. As we raced ahead and became part of the global economy, the salaries of our top people have been pulled up by those of their counterparts in the advanced countries and vice versa for those in the lower ranges. This trend is not likely to be reversed, unless we go into decline, in which case, the highly-trained and highly-skilled will leave, accelerating our fall. Of course, there is no extrapolation to its logical conclusion, as sometimes it would stabilise and plateau, because you cannot have a society which keeps on diverging. You can see from the protests in the developed countries - in America, now in France - that they also are protesting against a globalised economy because their lower end and their middle end earners are hurt by the export of industries, services and jobs; and they are really working against the interest of the developing world that needs these industries and jobs. So I advised the Prime Minister, and finally persuaded him to take this formula of an automatic adjustment to Parliament. The earnings of our top earners will continue to go up with the growth of our economy and so must ministerial salaries. This is a very strong trend. Let me give the growth in the last 10 years: average of the top 24 in six professions in 1989 (which is for 1990 income tax) was $1 million. Five years later, in 1994 it became $1.4 million, an increase of over a third. In 1999, it was $2.5 million, an increase of three-quarters, just in the last 10 years. So had we not had this formula, the prime minister would be faced with the awful dilemma of taking the 1994 salary and saying, "Can we revise it by 76%?" There are lawyers and doctors in this House - Shanmugam, Davinder Singh, Dr Michael Lim. They are in the private sector and they can confirm by how much the earnings of top lawyers and top doctors in the private sector have gone up in the last five years. In tandem with ministerial salaries, and the ministers form the benchmark, are the salaries of those in the higher echelons in the public service, and they are absolutely crucial officers of the State. Without good men occupying these positions, we would be unable to maintain our present standards - the Chief Justice, judges, attorney-general, auditor-general, accountant-general, permanent secretaries, CEOs of statutory boards. When we took over in 1959, we inherited a civil service recruited by the British with very few locals whom they picked from the best of a small pool of local talent. And it has been one unending process of improvisation and adjustment ever since. For years, we could not get good lawyers to be judges, because the disproportionate earnings in the private sector which they have to give up to become a judge make it unrealistic. Only after 1990, when we had made radical salary revisions, and implemented them, has there been a full panoply of High Court judges. And it is an unending struggle now between the private sector, which includes multi-national legal corporations in Singapore, and the attorney-general's office and the legal service to compete for top talent. Let me now explain how we have done it in this chamber. To self-renew, MPs and ministers, besides the civil servants, we had to recruit at every election able younger people. For ministers, I persuaded, and my colleagues too, able academics with PhDs and professionals to run as MPs, then appointed them as ministers. Many did not make it. The attrition rate was high. These scholars had good minds and the ability to marshal facts and figures, and to present them. But they did not have that quality necessary for a minister - "judgement" - making a decision, the right decision, on the basis of complex and incomplete data. You cannot wait until you have got all the facts in and then decide. It is a moving situation. You have to decide where the trend is, what should we do. So I cast around with my colleagues and tried out successful men, never mind whether they got PhDs or not, but whether they had succeeded in the real world, men who have been successful in their professions and business and in their own fields. The results were better. Some of my ministers were very good at judging people. Hon Sui Sen, who was one of our best civil servants, permanent secretary, head of Economic Development Board, and later on I persuaded him to become an MP and then finance minister. He recommended several, among them people whom he had worked with - Goh Chok Tong, S Dhanabalan, Tony Tan. They were three heavyweight ministers. We did not know that when we started. We recruited them in the 1970s, but we knew them only in the 1980s. Each year, we also selected 20 to 30 (later we increased it to 100 to 120) of our best students for scholarships to study in the best universities and bonded them to serve the government for eight years. Parents were poorer then, and scholarships were few. So we had the pick of the crop. And it is from that generation of the 1960s and 70s that we have today the present leaders of the civil service and the statutory boards, and quite a number of ministers, scholars and SAF scholars. But since the middle-80s, especially in the 90s, our economic conditions changed and social attitudes altered. Now scholarships are numerous and commonplace. I read the Straits Times supplement on scholarships. Hundreds of them every year, because they had seen how we had succeeded - the private sector, the banks, even foreign multi-nationals in Singapore. So the Straits Times devotes a whole supplement to the scholarships on offer, describing, tabulating and comparing them in detail. Statutory boards, GLCs, all the big banks, major companies, like NatSteel, MNCs like Exxon Mobil, KPMG and American Insurance (AIA), they all give scholarships. They are all chasing a limited pool of scarce talent. Moreover, many parents now earn enough to send their children abroad to the best universities and do the subjects of their choice and have their children sign no bond, except to the father and mother, who would agree to whatever they want to do. This has changed the whole system of early recruitment and nurturing and career development of the best for higher appointments. For the last few years, the government and statutory boards no longer have the pick of the crop. That means 10, 15 years down the road, we may not have the same quality at the top echelon. Hon Sui Sen recognised these changed circumstances and the altered values of our young. So he persuaded me in the 1970s to abandon this handcuffing of government officers by their pensions. We were losing, he said, too many good top men who are quite prepared to give up their pensions because they were attracted to lucrative careers in the private sector. So if we did not pay them pension, we could up their salary and compete. I was uneasy because we were departing from an age-old system. The British ran an empire for 200 years based on lifetime employment in the government service. But Hon Sui Sen himself had spent his whole life in government service and, at the end, he told me, "Look at my pension!" It was a pittance because inflation plus growth meant a pension was worth little. And he was convinced, and finally convinced me, that younger officers no longer considered their pensions a strong pull factor when deciding whether to stay or to leave. They wanted to be paid their worth immediately and so wanted to go on CPF. After much hesitation and reflection, I accepted the change and agreed to abandon pensions in favour of CPF. This led to the next series of other changes where salaries have to be regularly adjusted to match their counterparts in the private sector, or we would end up with the second and third best. It is a continuous series of exercises. In the old system, the British recruited straight from the universities; whether you are a law graduate, doctor, accountant, surveyor, architect, they all have similar salary scales. We inherited that. We carried that on. But it was unrelated to reality. Nobody can predict which profession would be the high flying profession when it comes to maturity. Today it's the law. Tomorrow, it could be something else. At one time, the architects in the building boom had the best returns. So we now have decided, as a result of abolishing pensions, that we have to go with the rate for the market in that profession. We have new multi-faceted problems, because the global environment has changed and the best, our best whom we send abroad, are being recruited by top MNCs, also chasing talent and prepared to pay off their bonds. What is $200,000-$300,000 when you can get a good mind already proven? You can watch his school record, you can watch his college record, you can see his capabilities in argument, in presentation, and you have a ready-made winner. Whether he is a big winner or a small winner, it does not matter. But you know this is first league. Let me now take you to how we are now placed. The present team in the government was selected and had worked with the old guards long before 1990. The selection started in the 1960s was not very successful because, as I said, we did not know how to spot who would make a good minister. So we chose people who sympathised with our views, and had good minds. But they lacked the quality of making the right decisions. We started to succeed only in the 1970s, after 10 years of error. And in 1972, I persuaded Ong Teng Cheong, then an architect, to give up his lucrative practice to join us. He took several years to wind up his practice first. He had commitments. Then 1976, Goh Chok Tong, S. Dhanabalan, and 1979, Tony Tan, and so it went on. There were many others. But, as I said, the attrition rate was still considerable. And at one time, we were so short of ministers to hold big ministries, that I persuaded two senior civil servants, top men, proven administrative ability, to contest elections and become ministers - Howe Yoon Chong, who was head of civil service, to become minister for defence, and Teh Cheang Wan, head of HDB, to become minister for national development. So it was an unending quest for the right man to put in the job. It takes many years for a person to be tried and tested as a minister, and to develop that judgement and trust. Every cabinet has its core members of the team, goal shooters and goalkeepers. Not all 11 players can have the same star quality. And it is the prerogative of the prime minister to pick his men and, having picked his men, it is his responsibility to get them jell into a team and, as a team, to deliver. I have grappled with this problem. And were it possible, I would have liked to pay the ministers the way football clubs pay their players. When you have a star player and you change clubs, hundreds of millions of pounds change hands. Could I do it? I would cause so much public discomfiture for the other ministers who are not goal scorers, that team would soon be unable to function as a team. So a certain balance must be kept, solidarity of the team and recognition by the captain that he is a scorer and he is a first-class goalkeeper. Somehow, you have got to get them to share not only the glory but also the remuneration. My core members for 25 years, they are well known to the public - Goh Keng Swee, S. Rajaratnam, Hon Sui Sen, Lim Kim San. Prime Minister Goh's core team must be obvious to all those who have watched how his government has performed, who have scored the goals, or have prevented them from being shot into our goal. I leave you to judge. But the point is that all the present cabinet members, including Lim Hng Kiang and Teo Chee Hean, were selected before 1990, before I stepped down. And since then, only three had made it to ministers of state - Peter Chen, Lim Swee Say, David Lim. The last intake of MPs was the highest average we ever had. But there is a difference between a good player and a Pele. That is what we have to look for, a striker. If the present team does not get more good men to join them in the next election in 2002, there will be a hiatus down the road. Good government did not happen by doing things naturally in Singapore. It was a thorough and meticulous process of selection and testing. Finally, I learned how the big MNCs did it in America, using psychologists and psychiatrists to recruit and to test before promotion. And we became better also at assessing character. The ability is simple to judge, but the character element is very difficult. But we have assembled together the best persons available and willing. And there is no alternative team, or group of people outside the government, who can replace this present team. I say this without wanting to discourage those who are outside. There are some probably star players outside, but you have got to form a team and work as a team. If this government should fall, standards of government would go down, because from the very start in 1959, Singapore has had a government which is led by ministers, not by civil servants. The permanent secretaries do not settle policy. They do not innovate. It is the ministers who strike out. It was Goh Keng Swee who started the Economic Development Board; Hon Sui Sen started NOL; SIA, DBS, so many things. They are creative men. It is the opposite of the Japanese system, where top civil servants shape policy. Therefore, if Singapore does not have high calibre ministers, our performance will degrade and our economic growth will stumble and social problems will increase. That we have adequate salaries for ministers removes only one of the factors that stand in the way of recruiting talent. Since the last revision to this formula, the prime minister has tried to get many from the private sector to join - top bankers, top CEOs. He ended up only with one - Peter Chen from Shell. Why did the others decline? Some have moved on and become venture capitalists. Because they are bright enough and shrewd enough to see, "Look, I am 40-plus. If I join you, I will be asked to stay on and on and on, if I am successful. If I am not, I am out. By that time, I have lost my connections." Some declined because they sized up the ministers and decided they may not quite measure up. So it is a difficult task. It removes only one obstacle, but not an insignificant factor. Politically, it is not possible for any minister, or any MP, or any person to say at the outset that he would not have taken on the task of being a minister if he knew he would not be adequately compensated. But what he would do is, do it for a short term and then excuse himself. I can say this because I have been at it for over 40 years and anyway I am approaching the end of my career. So I can tell you the blunt truth. That period of revolutionary change that threw up people with deep convictions and overpowering motivations is over. That is a fact. We are in an era of high growth with fortunes being made by the enterprising, whether in a dot.com company or in finance or fund management, or in the professions. And the whole social climate has changed. I was looking through the latest Forbes magazine which I have got by courtesy of SIA because I am a frequent flyer. One whole copy lists out all the billionaires in the world with short descriptions of how they became what they are. I am quite sure they sell a few hundreds, if not a few thousand copies in Singapore. So all our top minds are reading and saying, "Surely he can do it, why not I try?" So we have a qualitative change in aspirations. And it affects the old guards too. Some of them meet me and say, "Look at my pension. This is what we are worth." So I looked at them and I said, "But that is the rules we made." They said, "Yes." So from time to time, I persuade the prime minister. I said, "Give the pensioners a bonus because we are doing well. But for them, we would not be doing well." But many of them, if I were to go back and ask them all again, and they knew the progress that Singapore would make, they would tell me, "You carry on. I will stay out." This is the real world. We are not talking of a hypothetical situation. These are real people who are going through a tremendous global revolution in values. You open up Fortune magazine, what is it all about? They also have their list of billionaires. Perhaps, if I were a young man of 35 or even 45, I will pause and ask myself, "Why not? Is it so difficult? Somebody else can do this job." But the plain fact is that very few people can do this job. I was explaining to the party secretary of Shenzhen when it was getting started in the 1980s, I said, "You have to be satisfied to run a system that enables many millionaires to flourish, and you are not a millionaire. And if you can do that, then you can succeed. But if you see the millions being made and you want to join in those millions, you will fail. The whole system will collapse." That is the problem. Look around and ask yourself: why has it failed? Because your authority to sign or not to sign a licence decides whether you will make him a millionaire or a billionaire or not, so why not make yourself one incidentally? It is not very difficult. In many countries, like America, people take on a job for a short period and then they go out to the private sector - where having served their country is a valuable addition to their bio-data, apart from the important connections that they will have. You look at one of the most successful American treasury secretaries since World War II, Robert Rubin - (Goldman Sachs, chairman) gave it up. For six years the market knew that they had a professional and a very able professional, and they had confidence in him. The boom in the Clinton years is partly due to him and to Alan Greenspan, chairman of the Fed. But he wanted to leave after the first term. He was persuaded to stay on. He stayed on another 11/2 years and now he is co-chairman of the Citigroup. Let me point out how long it takes to get an MP to learn to be a minister and have the public recognise him as such, especially when he is not a natural crowd puller or a mobiliser. There are two kinds of ministers in Singapore - the doer and the mobiliser. The ideal is to be able to do both. When Mah Bow Tan contested against Chiam See Tong in Potong Pasir, you would not believe it, in 1980, he lost. Because you stand in a crowd, watch two chaps performing, and say, "I think this chap looks reasonable. He is bright, energetic," and so they voted for him. But I happened to know Mah Bow Tan and I knew his career. He had worked closely with me when we tried to help the Singapore Monitor get started to compete against the Straits Times and halfway through he told me, "Look, we can't. It will lose because of the grip of the Straits Times on all sources of news. They've bought out all the agencies, all the cartoons, everything. You cannot beat them." I decided that this man has judgement. So we fielded him in 1984 and only after another 10 years, now 16 years, that people have a different impression of him. They know that he is competent and effective. Look at the ministries that he has handled. So the prime minister now gives him National Development. Next, you take Teo Chee Hean. He stood in the by-election in Marine Parade in 1992 - tall, lean, lanky, a bit gawky - as against Dr Chee Soon Juan, voluble, exuberant. If it was not a GRC, one-to-one, he may well have lost. Because what was the basis for judging? A short note about his CV and you see the physical person and you judge him on what he says at a few rallies. But eight years later, from the things he has done, from the difficult problems he is setting out to solve, people recognise that this is a thinking man and a very serious man who gets things done and he is going to get the schools up to a different level, and the teachers too. They have seen the quality in the man, the depth of his commitment and that he can deliver. You take Lim Boon Heng, a Colombo Plan scholar, did naval architecture in the University of Newcastle. He worked in NOL in 1971 but because Goh Chok Tong had worked with him, he knew that this man can do things. He persuaded him to stand for election as MP in 1980, then sent him to NTUC to work with the secretary-general, Ong Teng Cheong. The NTUC is not a glamour sector. No great addition to your bio-data that will get you into a higher job. Maybe you can become a human resource or a trade union contact man. But from a good government point of view, NTUC is absolutely crucial because your policies have got to be sensitive to the large mass of the semi-skilled and the unskilled and somehow you must be able to craft your solutions so that they also have a place under the sun. Quietly, he built up rapport with union leaders and workers and won their confidence by his sincerity. Eleven years later, in 1991, he became senior minister of state for trade and industry, to test his decision-making power as an administrator. Then in 1993, he went back to NTUC as secretary-general and minister without portfolio in the PMO. When a difficult measure like cutting the CPF by 10% was necessary two years ago, he played a major part in persuading workers and union leaders to agree to this rational but emotionally very difficult cut. The point I want to make simply is this. It takes many years of quiet work to build up relationships and establish trust. Those in the NTUC doing this job, they are a crucial part of good government. As I have said, one flaw of the democratic system is that voters do not have a proper assessment of the real person behind a first-time candidate - his character, his steadfastness, his trustworthiness. They only know him after several years and it is true of ministers, of the Speaker and of every MP, including the opposition. Both Chiam See Tong and Low Thia Khiang have been re-elected because their electorate has seen them as consistent and steady and are prepared to continue to have them represent them. Hence, it is important that MPs are suitably remunerated. People need time to gauge and assess who has the qualities best suited for what jobs that can make Singapore grow and thrive. The danger for Singapore is one of sudden change, a new school term with new pupils, new prefects, new head prefect, and a new school principal. Many things can go awry. And I cannot over-emphasise the importance of continuity. The virtuous cycle that we have established, which the prime minister spoke about earlier today, is a cycle of good government making for high growth and social progress, leading to the re-election of good government, leading to the ability to renew that good government by recruiting more good men to continue the work. That cycle could be broken. If it does, it will probably never be re-established. You just look at the travail of the LDP in Japan. After 40 years in office, in the last decade, they have suffered from decreasing voter support. One factor which will help prevent that happening in Singapore is to have elections without money politics - no money to win elections, even to fight elections, and to pay ministers, judges, permanent secretaries, CEOs of companies and all those in the Government two-thirds of the market rate for the job. The issue is a simple one, whether the public sector should adopt the market rate. Big corporations give their top CEO share options, worth multi-millions, to attract the best. When they fail, they are out. Proctor & Gamble had two bad quarters, and the CEO resigned, and they looked for another one. This government has raised Singapore's per capita GDP from third world to first world levels. 1959, per capita, $1,300, when I first took office. 1990, 30 years later when I stepped down, $22,000, from $1,300. Ten years later, after Prime Minister Goh took over, it is now $37,000. Sit down, ask yourself, was that doing what comes naturally? What needs to be done to achieve that? A working system, good policies, anticipating problems before they hit you. The question really is: can we afford not to increase the $28 million paid to office holders last year by a further $6 million, which the revisions cost? See it in proportion to what is at stake. Pay the judges what we used to pay them and ask whether Chief Justice Yong could have done what he has done in the last 10 years. I knew the problems with the Bar and with the courts. Work was piling up. The problem could not be solved. It could only be solved by a complete change of system. I looked for a man who was a lawyer, whom I have known since we were in university together, who had gone into private practice and become a top banker. I asked him to take on this job. He has a real grasp of the outside world. I gave him the support. I said, "Change it," and he has. And in 10 years, it is a totally different judiciary, a totally different system, because he has been able to persuade good men to take up these jobs. The sum total increase which we are talking about is $400 million a year, and they involve billions in the GDP every year. Finally, do not believe that we have escaped the problems that have plagued our neighbours and the region - KKN for corruption, collusion and nepotism, which have caused so much damage. If we believe that we are immune from it, we are really risking our future. It is a world-wide disease and especially endemic in Asia, and we can be easily striken by it. Only constant vigilance has kept it down. Our market-based pay and allowances will give no excuse for any slippage, and it is the duty of all of us - MPs of all parties and ministers - to be alert, to make sure that no KKN incidents take place without proper investigation and punishment, and to set the example by maintaining high standards in protecting the integrity of our institutions. And you need two things for Singapore's continued well-being - strong institutions and good men to run them. [Applause]. 4.50 pm

Thank you, Sir, for allowing me to join in the debate. I am not sure what I can contribute after all that has been said, especially after the last speaker. Let me start by saying that Nominated Members of Parliament such as myself do not enjoy the same allowances as the elected MPs, as reflected in Annex 3 circulated by DPM Lee. I say this not to begrudge them or to claim any moral high ground. I only say that so that all my friends would not try to claim lunch from me next week! The DPM's statement covers three main issues - new approaches for civil service leadership, the civil service salaries as a whole and, third, and most controversially, the salary increases for senior civil servants and Government appointments. These are linked but quite different. I will make just some short points on the first and second issues before moving to the third and more controversial. I would say that this is a very difficult debate to join, in terms of how it is structured. On one hand, clearly in this House, we have emphasised the market and logic. The emphasis has been on the need for good government, ie, this Government which is trusted and has done well. And it is this Government that is asking the public to believe in the steps that it is taking. What do we have, on the other hand? As characterised in this House, we seem to have the politics of envy and emotion, and the danger of bad and corrupt government. My argument is that there is, on this other hand, something more than this, and that we may need to consider. The words "equity", "idealisim" and "moral leadership" have been far less prevalent in this debate in this House. I think all of us would say that maybe this is accepted, understood, as part of the background, but I think they bear re-emphasis. Of course, everyone will agree that a good living wage, and reward are necessary for political leadership. But very few people in this House have spoken of the reward of other less tangible things. When the Senior Minister was speaking on the founding generation, he made it very clear that they were special, and that events of history had brought them together. He also made it very clear that they were human enough to have some tinge of envy at the present salaries. But I would say to them also that because they were participants in that great history, they have and deserve our respect in a very deep way, and that is what I mean by the reward of less tangible things, of being able to say to their children that "I did this for you and your generation, and your children's generation." Sir, what I am concerned about in bringing this issue up, particularly the rewards for the politicians, is of the unintended consequences of debating this case in a very public, rigorous way. We are in danger of over arguing the case, I believe, that if we do not agree to these salary revisions, then everything we do will fail. I think that is a dangerous argument. And, therefore, I was glad to hear earlier today Prime Minister Goh's assurance of the other five Cs, not the typical 5 Cs of society, of the market place, but these other 5 Cs - qualities such as character and compassion - that he spoke so well about. I want to acknowledge therefore the good that our Government has done and the need for future good government. But I want to question what are the factors that made it good - only money or is there something more? In fact, this recognition of a good government is one of my starting points, because I think one of the questions that has not been asked so far is a very basic one. What is the mischief that we are seeking to avoid? Let me begin with the pay increase for the majority of civil servants, which has been less controversial. But the pay increase is nevertheless substantial. In moving it, Deputy Prime Minister Lee has assured the House that the Government is trying to follow the market, but not lead it. I understand that some people in the private sector have some reservations. They think that the wage hikes will undermine some of the cost-cutting measures we took to enhance Singapore's competitiveness last year and, secondly, that they may potentially spark a bidding war for talent. In this context, I would ask the Deputy Prime Minister to address these concerns. Sir, I would like to suggest a new mechanism. In future, when Government decides to go well beyond what the NWC recommends, as in this case, these further adjustments should also be the subject of some consultation with the private sector. In that sense, it is NWC plus. The NWC tripartite system is a model that has served for the basic wage increases, and I do not see why it should not be reasonably successful in negotiating even these further efforts to catch up with the market. Because the Government, put together, is Singapore's largest employer, and what it does, does matter to the private sector. In saying this, I want to emphasise that I do believe that some turnover in the civil service is not a bad thing. There is no harm in having some percentage of people transfer from the public sector to the private sector and, in this way, learn how these two different entities work and perhaps link them better. There is a certain dynamism in this, to create better links and understanding between the sectors. In that sense, I am urging that the Government take a view of acceptable levels of turnover and monitor trends against this before acting. This is necessary for the bulk of the civil service, but it is especially true for the elite Administrative Service. And with that, let me turn to my second point of the measures concerning this elite. What I am saying is that by looking at turnover, we will avoid the possibility of over reacting, because one or two elite civil servants leave. Allow me to cite some figures published in the Straits Times on Thursday, 29th June, in the article "Fall in Number of People who Quit Jobs". The report cites research by the Manpower Research and Statistics Department. It says that the rate of labour turnover has, in fact, declined in Singapore, following from 4.4% in 1990 to 2.1% in 1998, and then 2.2% last year. Of course, these last two were bad years, and people tend not to move in bad years. In that sense, I want to ask the Deputy Prime Minister, in moving these large financial measures to catch up, what is the turnover for the civil service as a whole, and key sections of the civil service. Why are we needing to take care of the turnover problem? Is there a problem? The report I cite also mentions that professionals, managers and others at the higher end of the workforce tend, in fact, to have the lowest resignation rate - 1.6%. In putting these questions to the Government, I also want to emphasise that there is the question of whether there is some sort of pent-up departure, in the sense that people have not left as normal in the last two years. There has been under reporting - 2.1%-2.2% - and therefore there will be a surge quite naturally this year, and then we may again level off. The second set of questions I have for the Deputy Prime Minister relates to what are the reasons that civil servants cite for leaving, assuming they have this kind of exit interview that asks such questions. I ask this because Deputy Prime Minister Lee's statement itself recognises that pay alone will not keep people in their jobs. The prospects of the new economy are not just financial, but the sense of pioneering, adventure and ownership. If so, then raising pay by itself may not be the right answer. Indeed, if we over argue this and over emphasise this, we may be misleading ourselves. There can be pay differences that do not lead to turnover or there can be high rates of turnover even if there is good pay. Other factors clearly come into play - factors that money itself cannot address. I believe there are some people who have good reasons to want to stay in the civil service to contribute, even if their pay, whilst reasonably good, is not the best in the market. I hope there are such people. In this sense, I actually welcome DPM's other point of his statement about the public sector leadership in allowing more mobility, this flow of people, by requiring fixed tenure of appointments rather than making Permanent Secretaries too permanent. This change in permanence is a good one. But I will put it to Members that in a sense it actually encourages turnover, perhaps of a healthy type. Nevertheless, it is something we need to consider. I move to think about these issues because of some recent publicity regarding a particular civil servant, Dr Finian Tan. From what I read in the papers, Dr Finian Tan was one of the very few, if not the only private sector top performer, to respond to the pay increases and the call of Government to join in the civil service leadership. He did well serving as Deputy Secretary at the Ministry of Trade and Industry, going through the civil service training, but now has recently left. He has got better pay. But from what I read again, it is not merely the pay that drives his departure. Without over focusing on this one individual, this case raises certain questions. Why is it, despite increasing our pay, the Government still faces difficulty in recruiting people to the top of the civil service and of retaining them thereafter? The same questions apply in that sense to the political leadership because we have not, despite these pay revisions, recruited very widely from the private sector. The new members of Cabinet have come much more from traditional sources of the civil service and statutory bodies and the ranks of the scholars. Let me then turn to the last point and the most controversial. I think it is understood that Singaporeans want a Government of good quality. But quality is not all. Cost is also a question of sensitivity and some degree of subjectivity. The very fact that we are in this House debating how the formula should be re-worked recognises this. The very fact that for the two years of the crisis there was a freeze recognises the sensitivity. So, are the changes that are being suggested enough? In some ways, I am for the changes because they actually try to make it a fairer system, 48 people rather than 24, the median rather than the average. But is that enough of a change? Again, I have to ask the question: what is the mischief? I think we are arguing today in a new context. Five years ago when we argued the principle of benchmarking salaries, we had the assumption that the whole economy was going to go up, that everyone would benefit from good Government and what Singapore will deliver for them. When we talked about this again in the crisis years, we all felt affected. Of course, looking back now, we know that those in the very top still prospered. But the general sentiment was that we were in it together as one nation, one society. In the context today, as emphasised by many speakers, globalisation will actually increase the differences between the top, the bottom, the top and the middle, and even a handful of the very top, from the next few in the 1%. This new context brings out not just the market forces which everyone has emphasised, but the question the Prime Minister and the Senior Minister put to us: what do we do as a society? Can we keep diverging as a society? The Senior Minister who spoke before me said no. We can hope there must be some balancing point. He pointed to global forces which then speak out against this continuing divergence. In this context, we have to ask ourselves whether this new policy will help or hurt us. This is why the public and this House have been engaged in debate about the true level of the bottom 10% in Singapore, whether it is $133 per month or $530 per month, if we take out the jobless people. Are those still too low? We have, in this context, to ask ourselves whether this new formula is really going to continue to help bind the society together in a deeper way. I emphasise "deeper" because the forces of globalisation are likely to get stronger. I think that many people are concerned that linking the private sector market is imperfect. We are told that Ministers are not priests. Fair enough. Another analogy is like doctors. We respect that doctors must earn a good living. In Singapore, they do. But if your doctor tells you that he is interested in your fees and not your health, you know you are in trouble. You want to change your doctor. In fact, the profession I am from, lawyers, is the reverse of this joke. Everyone thinks that lawyers are in for the money, which is why there are all these jokes about lawyers and sharks, paying each other mutual professional respect. Sir, the political dimension should be recognised and handled, not just with appeals to logic but with due recognition for the values of society, of compassion, equity, if not, the sterile hand of equality. If other governments pay too low, or are corrupt, they provide us with very easy targets to say that what we are doing is exactly correct. It is true that others do not have the right approach. If we look at the US, I believe the salary of the President has not been adjusted for about 17 or so years. That is clearly wrong. But we do not need to jump so fast to the reverse. They need not be adjusted automatically every year based on a very small number of top performers when the world is globalising and differences are accelerating. We need to have good Government. We need to have competent bureaucracy. A part of that is to have very strong links to the median of people and even the bottom of people. I would therefore urge the Government to consider at least one proposal. This is that the benchmark should no longer be with those at the very top, whether it is 24 or 48, but aimed to be with the median. In many statistics, one can analyse companies based on how much the CEO is paid as compared to the bottom worker. Sometimes it is a multiple of 20, 30, 40 or more. That, in some ways, will be more comfortable for me and some Singaporeans, that Ministers should receive a good salary, one that puts him above the temptations of corruption, one that allows him to worry about the affairs of state without worrying about their own pockets, but perhaps one that is pegged as a high multiple of the median. This is more comfortable because this would actually create the linkage between their performance in bringing everyone up and not allowing just the few top people to fly ahead of everyone else. If the Government will not consider this for the base salary of the top political leadership, I urge them to consider it for the bonuses. As proposed, the bonuses are pegged to GDP and GDP, as we know, is too raw, too global, a figure. We need to target the bottom. We need to target the median. We need political leaders who constantly emphasise their links in both pocket, in compassion, and where they stand with these people at the bottom and middle of Singapore.

Sir, Singaporeans take pride that we have a Government that is efficient, corrupt-free and, more importantly, one that is far-sighted. However, in any country where salaries of politicians are raised for discussion, it stirs emotion and public talk. Hence, it comes as no surprise that the topic of salary revision has become public topic today. I am glad that the Government, in a true, open and transparent manner, has chosen to table these salary revisions despite it being not the best of times to do so, especially when we are recovering from a recession. Sir, I commend the Government for tabling these salary revisions timely for public scrutiny and debate. Sir, let me first comment on the salaries of the Ministers. Few can deny that our Prime Minister and the Ministers are a fine lot. They sacrifice much to take on political appointments. They sacrifice career certainty for political uncertainty. They sacrifice privacy for a regime of taxing Government and community work. Many also sacrifice private and family life for the country. Sir, they manage a Government whose foreign reserves are in the billions, an economy that is vulnerable and they are also responsible for the well-being of three million Singaporeans. Sir, the critical issue is whether our Ministers focus on running the country or constantly worry how they will meet the present and future needs of their families. If we want the best, let us then pay the best and expect the best from them. That the ruling party sets very high standards for the recruitment of Ministers is there for public scrutiny. Our Ministers are questioned in Parliament, by the media and even in international forums. Their impressive knowledge, thought process and management skills are there for everyone to see and to scrutinise. Even critics are known to have conceded due credit to our Ministers. The original benchmark formula adopted in 1994 was not the best as is recognised by the further refinement announced recently. But it has to be so as the compensation package in the employment market is one that is never static. Stock options were something new here in 1994. But now these are becoming basic in many new companies, particularly in the emerging new economy companies. Change is the only constant thing in the new economy, and I am glad that this Government is tackling the issue of compensating public employees head on. Talking to some Singaporeans yesterday, I felt that many do not really understand the details announced. To many what mattered was that the increase was substantial. The usual criticisms were raised. I thought I would raise them here so that they can be discussed openly in this House. Some of these have already been highlighted by the Prime Minister. Some felt that political office is an ethical and moral one and not one that is purely pecuniary based. They felt higher salaries will translate to cynicism and less respect for the Ministers. Some stated that the benchmark formula used is not representative of the pay of employees but are that of entrepreneurs who make big bucks not due to hard work but due to connections, guanxi, high risks and sheer luck. Some also felt that Ministers should set the right example by withholding salary increases in an economy that is still recovering. Their point simply was that the timing was inappropriate. Another view was that the new pay packet was one drafted by civil servants for civil servants and one that was not subject to external evaluation. Some even expressed the view that the new increases will trigger a wage spiral in the economy as it becomes a case of many chasing fewer job candidates in the market. Sir, what became clear to me after yesterday's feedback was that there are two groups of people. One group is those whom I would call the "I know" group and the other the "I know not" group. Those whom I refer to as "I know" group are the people who are very familiar as to what is happening in the job market, particularly for the top talent in the economy and they know that it is very difficult to get good talent even when you pay high price. The other group which I call the "I know not" group is the group that has basically no knowledge as to what is happening in the top talent market and they do not know how much it takes to pay them and how difficult it is to recruit top talent. What has become clear, even when listening to the debate that took place today, is that even some MPs are not clear as to how tough it is to get good talent in the market. Some MPs have expressed the view, particularly the Members for Potong Pasir and Hougang, that our leaders' salaries, particularly the Ministers' salaries, be pegged to a reasonable level and they compare to the salary of about $50,000 or the salary of the US President. Sir, Mr Chiam, in his address, stated that the US President's salary was increased from about US$200,000 to US$400,000 which works out to about S$630,000. But when the pay of the US President was raised in 1998, one of the reports indicated that the President himself was embarrassed. However, the reality was that they had to increase his salary because the US President's salary formed the benchmark for the whole US administration. Only when they increased the salary of the US President could they then increase the salary for the whole administration. Similarly, when we benchmark the pay of the Ministers, we are not only talking about the pay for the Ministers, but we are also talking about the pay for the whole civil service. Although we are asking our Ministers to sacrifice and forgo salary increases, the reality is that below them there is a big group of civil servants who are all waiting for their pay increases and will constantly compare with what the private sector is paying and what is the attraction in the private sector. Although we are calling for Ministers to restrain pay increases in the course of the debate, the reality is that we can never keep the pay of the Ministers low and yet try to keep our civil servants by keeping their pay high. We have to ensure that the whole public sector, which includes the Ministers, is always paid at the level with what the private sector is able to afford and also attract the same talent. Sir, nevertheless, it is essential that the Government continually explains the transparency of our Ministers' pay. Let me highlight many other things that the public is not aware. Not many are aware that our Ministers' pay packet is a whole package and there are no hidden benefits. There is no free housing, no free cars for private use, no servants' allowance, or paid holidays for them or their family, as it is like in many other countries. Even the US President's pay is not merely what he gets in terms of the US$400,000 but he enjoys many other perks, including a special jet for himself. So there are many other perks which if one packages it in, I am quite sure it well exceeds what our Prime Minister or many of our Ministers earn, and that is something that was missing, I thought, in the debate that took place in this House today. Similarly, Sir, not many are also aware that not all Ministers are paid the same salary and bonuses but a range of salaries and bonuses according to appointments held, performance and other yardsticks, as also similarly indicated by the handout by the Prime Minister in respect of bonuses. Not many also remember that Ministers, just like all big income earners, also pay a large income tax which basically creams off 26% of their income. Not many also remember that Ministers are not permanent tenure holders but individuals whose tenure is decided by the people once in five years. Not many also remember that they manage an economy that has a GDP of $154 billion as of 1999 and a foreign reserve of about $128 billion. Not many also remember that we hold our Ministers responsible when anything goes wrong in the country. If I remember what happened in 1997, everyone, particularly the workers, was asking what were our leaders doing about the recession and their loss of jobs. Similarly, Sir, not many also remember that we hold our Ministers responsible when anything else goes wrong in this country. Literally put, Singaporeans expect our Ministers to be "Superman". My call is: let us then pay them what they are worth and what they deserve. Despite these criticisms at home by Singaporeans, many Singaporeans I met overseas usually take pride in stating that Singapore has a corrupt free environment because our Ministers and public sector employees are well paid. Sir, having added the above, there are two important issues that I would like the DPM to address, and these are: (i) whether our well-paid Ministers will continue to share the aspirations and concerns of the ordinary Singaporeans, particularly the low-income groups and the disadvantaged in Singapore; and (ii) whether the new salary structure is adequate to attract and retain the best in Singapore to become Ministers and political appointment holders. Sir, let me now move on to the civil servants' pay revision. While I recognise the need for the Administrative Service to continue to recruit and retain the best talent, I think it is the best approach to ensure that the civil service remains the backbone of a good and clean government. I am convinced after my interaction with the Administrative Service officers over the years that they are both hardworking, have great minds and that they are also creative and, most of all, have the interest of the State in their minds. Some are at times mistaken that Administrative Officers have a cushy job. I thought I will highlight an instance so that we recognise the heavy burden and responsibility that some of our Administrative Officers carry. While serving on the Inter-Ministerial Committee for the Ageing last year, I gave a tough assignment with a tight schedule to an Administrative Officer supporting my sub-committee. He produced the required work in 24 hours. Sir, I saw his very red and tired eyes the next day and knew that he had worked overnight. I asked him whether this was common to him. And he informed me that he provides administrative support to four to five committees usually and this was on top of his regular job at the Ministry. I highlighted this to show that we pay them well but we also expect and extract a lot from them. I am sure that such officers will be in high demand in the private sector and employers will pay a premium to recruit men of such quality. The more such men are lost in the civil service, I think the bigger the loss for Singapore. Sir, I would like to urge the Government to ensure that the career route to the Administrative Service continues to be fair for entry by all others at all levels. The Government must ensure that the Administrative Service is not a closed club of Mandarins who only get admitted through Government scholarships or academic excellence. The more it remains a closed club, it would invite resentment and criticism. It must continue to recruit the best talent based on academic performance and proven performance. It must also continue to remain open to proven talent at all levels both from other Government departments of the civil service and also from the private sector. My bigger concern is whether our new class of Mandarins will lose touch with the average Singaporeans. With better pay and bonuses, many will climb the ranks of the well-off too quickly. I already sense that many Singaporeans are feeling that our policy making top civil servants are losing touch with the ordinary lives of Singaporeans. How do we ensure that they remember that many Singaporeans are working class people with real problems like balancing their bank accounts every month? How do we ensure that they keep in touch with the ordinary Singaporeans and not just the top income groups? Lastly, Sir, let me move on to the civil service general salary revision. Sir, I support the rise in the salary of all civil servants as it will certainly go towards building a first class public service. What I would like to ask the DPM is whether exit interviews are conducted when civil servants resign from the civil service. I am sure many Singaporeans will be interested in knowing whether salary was the reason for the resignation of the 284 senior officers from the Senior Officer Service so far this year. The details, if they are available, will enable Singaporeans to better understand the dollar pull of the private sector. If the reason disclosed is family commitments, pursuing further studies or other reasons, then improving the financial package will not address the problem. I do hope that the Government will pay attention to the detailed reason for the resignations and take the necessary action. Secondly, if the Government benchmarks the salary of the public sector to the private sector, the public also expects the tough practices of the private sector, such as in the area of human resource management to be introduced into the public sector. In the private sector, non-performers are given adequate notice and shown the door. Some have expressed concern whether the public sector will be able to fire non-performers. It will be no use if "non-performers" are transferred to other departments as such non-performers will only continue to "non-perform" in the other departments within the public sector. Is the public sector really able to bite the bullet and fire the non-performers at all levels of the public service? Lastly, Sir, with better pay and bonuses, the public will expect even higher standards of public service. The public will become less tolerant of long queues at polyclinics, delays in replies and average service. I would ask the DPM how the civil service will respond to these expectations. On that note, Sir, I support the public sector salary revisions tabled by the Government.

Mr Speaker, Sir, it is not by chance that the citizens of a small resource scarce country can live peacefully, comfortably and ably, equipping itself to face the challenges of the new economy. It is not by chance that the Singapore economy made a V-shaped recovery from the recent stormy recession. It is not by chance that we can boast of Ministers of integrity and competence, and who can carry themselves well in international forums. Sir, the preservation of a good, efficient and honest Singapore Government in the new economy is too crucial to be left to chance. We should put in place a mechanism to help nurture this. It is on this basis that I rise to speak in support of DPM's ministerial statement. Sir, I would like to make the following observations: Firstly, Sir, the Government's recognition of the impact of the new economy on the Government and the aspirations of young officers is most timely. What is the new economy? I do not think that anyone can readily claim full knowledge of the new economy, as the very nature of the new economy is that it is ever changing. But one thing is certain. The fast pace changes will generate opportunities, such as the sprouting of dot-com companies and life sciences. These opportunities will come by swiftly. Unless we position ourselves well and ahead of time, we run the risk of lagging behind in the competition. Given our natural resource constraints, Singapore cannot afford any slip in our competitiveness. What this means is that we need to have a government that keeps pace with new trends and developments, has the capacity and audacity to act promptly, has senior civil servants who are willing to read up on life sciences in order to grow the Singapore economy. In short, we need a vibrant civil service. The typical image of a civil service is that of an ageing, inflexible bureaucracy, a fogy old man holding the reins. A typical image of the Singapore civil servant must be one with the attitude of agent Ethan Hunt in "Mission: Impossible 2", highly skilled, IT-savvy, high IQ, high EQ, excellent network of contacts and gutsy enough to make calculated risks. I believe that with the proposal set up in DPM's statement, we can take heart that we will have to place a continual leadership renewal process in the Government. I believe that the DPM's proposal will help to maintain the average age of senior civil servants. By instituting a 10-year term, the Government will send the right signal that it is no longer an iron rice bowl. It will allow Administrative Officers who have completed a 10-year term to bow out gracefully, should they choose to do so. This in turn will generate more opportunities for other competent Administrative Officers to rise to the top. My second observation concerns the review of the salary benchmarks. I believe it is a timely exercise and will even go as far as to suggest that it should be conducted every three to five years. So far, we have heard ample suggestions on how to compute the Ministers' benchmark. Which is the most acceptable one? In my opinion, we should not trip ourselves on the technicalities of the benchmark formulas. We should not be overly concerned regarding whether we cut it fine enough. Rather we should use the ranking as a sanity or reality check to ensure that the pegging is at the right level. For example, the Prime Minister is ranked 63rd after the salary revision. Given his duties and responsibilities as the Executive Chairman and CEO of Singapore Inc, he must be grossly underpaid in the marketplace. Our Minister at Staff Grade 1 is only ranked 367th, which again is grossly disproportionate as compared to a person of the same calibre in the marketplace. And using the ranking as a reality check, I believe that the proposed benchmark revision is reasonable. I suggest that we should not view the remuneration of our Government and political leadership entirely in market terms. I suggest that we should not deceive ourselves and say that all Government leaders be only driven by their self sacrificial public service spirit. Let us be realistic about it. Let us try to marry the need to be driven by the market and public spiritedness. The test of the worth of the Government and political leadership is in times of crisis. Can they stand the test? They have done so repeatedly, and again in the recent economic recession. The litmus test for the political leadership is in the elections, just like the private sector. If we feel that the management team has done a lousy job, the shareholders can convene to dispose them. We have an increasingly sophisticated electorate. I believe that they understand the need for good government. I believe that they understand that good things never come cheaply. Likewise, there is a cost to good leadership. Sir, I support the DPM's ministerial statement.

Mr Speaker, the Senior Minister and the Prime Minister have just earlier shared with us and reminded us of the calibre of our Ministers and the achievements of the Government. Actually, I think there was no real need for that because there is no question that our Ministers are deserving and that the Government has done very good work. The question that is troubling me is how you reconcile the pragmatic approach that we will always take in reducing everything down to economic equations, on the one hand, with our call, on the other hand, to Singaporeans, and to younger Singaporeans especially, to be patriotic and to have a love for their country and to have a commitment to it. These two days we have been debating and discussing the salary revisions that are just about to be made for our top civil servants and Ministers. Just about one month ago, the results of the 1999 Labour Force Survey were published and they were a reminder for us that things are not all well for all Singaporeans. Much of the discussion that has ensued in the weeks since have focused particularly on the bottom 12% of households with income of less than $1,000. Not that much attention was paid to the next category which was the households with income of $1,000 to below $3,000. This is another full additional 30% of our population. While we are certainly not destitute, they are not anywhere close within reach of what we all consider the good material things in life. And we all know and recognise that cost will continue to increase and that, with this increasing cost, this group will also struggle more and more to be able to afford these good things. These two groups together comprise a full 42% of Singaporeans. I have no argument with the philosophy of paying a person his worth and of the importance of having the best people in leadership. But with this juxtaposition of earning capacities right now so starkly highlighted, I strongly and sincerely urge the Government, our top civil servants and Ministers that, as the Government continues in its work to formulate and implement policies and programmes, it takes pains to be seen to be sensitive to the aspirations of and gives adequate weightage to, not alienating, this full 40% of Singaporeans. 5.35 pm

Mr Speaker, Sir, I thank all the MPs who have contributed to this debate. It has been a very good airing and arguing of the issues. Rather than replying to the MPs one by one, I will group the issues together into seven separate sections and deal with them block by block. The first group of concerns raised has to do with the quality of the civil service. Pay them well, yes, but ensure that they perform. Prof. Chin Tet Yung argued that selection for Public Service Leadership positions must be rigorous. Dr Vasoo asked whether the civil service quality will be maintained. He asked whether we have attracted good people since the last revision. And Mr Inderjit Singh, Mr Ravindran and several others strenuously argued for measuring performance and penalising non-performers transparently. They did not ask to cane them. I fully agree. And Mr Zulkifli raised the question of free riders, which is the same thing. I fully agree with Members that selection must be rigorous and standards must be high and must be enforced. And we have not left this to chance since the last salary revision. Over the last five years, since 1995, for the Administrative Service, we recruited 148 people, that means, nearly 30 a year. We lost 115 for a net gain of 33. So we now have 275 Administrative Officers. The people who left - left through resignations, left through retirement - part of this outflow happened by itself, or maybe even happened despite our best efforts to discourage good officers from leaving. But an important part of this outflow was the result of active management, as we redeployed our people who did not fit into the Administrative Service career track. So there has been a considerable amount of turnover every year in order to leaven the group and to raise the standard of the group. If we measure the CEP, the potential of the officers who are in the Administrative Service, five years ago and now, there has been a significant improvement. Look at the officers aged 30 and above, when they have been in the service for some years and we are able to form a good assessment of their standard and where they can go, how many of them can make it into a Deputy Secretary position, or now what we will call a PSL position. Five years ago, less than half, about 46%. Today, after the turnover and after the recruitment, 63% have the potential to make it into PSL positions, nearly two thirds. These are regular assessments. We have committees, we have cross-checking, PSC interviews the officers and confirms them. So we are reasonably confident that the quality of the service has gone up. And we have been discriminating in rewarding the performers as opposed to the non-performers in the service. We have the performance bonus. It has been a valuable tool for making a distinction. Some MPs said it is not transparent. Is this the way to pay people more automatically? It is not. You work for your performance bonus. Earlier, the Prime Minister had provided the distribution for the Ministers, how many received how many months of performance bonus. For the Administrative Officers (AOs), we have divided them into four categories. "A" performers, very few; "B" performers, well above average; "C" performers, who get the base rate, are doing well, but average; and sub-performers, who get nothing. Last year, 234 people were eligible to receive performance bonuses. "A" graders, 3; "B" graders, 68. So to get an "A" or "B" grade, you must be at least in the top third. "C" graders, 155, most of the rest; but no performance bonus, 8. So there is a possibility of your being graded below average. And if you continue to deserve zero performance bonus, after a couple of years, something more drastic will happen to you. It is not the quota. We do not automatically rank everybody and say the bottom person will forcibly be taken out and shot. But we make a hard-headed assessment and we have instituted procedures to make sure that hard-headedness prevails and we do not after a while, out of the goodness of our heart, lower our standards and slacken in what we expect people to perform. So we will continue to manage the Administrative Service, to continue to recruit new talent, and to continue to manage officers who do not fit into the Administrative Service career path, and retention criteria. And now that we have defined the Public Service Leadership positions, these retention criteria are going to be more stringent. Because the test is: do you have the potential to make it into a PSL post? And if so, you stay; if not, we have to move you. But, notwithstanding the calls for blood and thunder, we have to handle this carefully and sensitively, because we are dealing with good officers and we do not want to demoralise the service. It is an unavoidable reality. Not everybody who joins the service will really turn out to be a satisfactory and ideal cut to be an AO. Some work out, hopefully most will; some do not. And we must take chances and try people out. Because if everybody who comes in works out, my conclusion is that we were too cautious at the entry point and we must have turned away many people who could have worked out, but whom we did not take a chance on. So there must be some expectation of people who came in and have to be moved out. But not everybody who has to move out is necessarily failing to make the effort. We decided to bring him in. We decided to judge that he might do it. It turned out that he could not. It is as much our responsibility as his. So therefore, when people leave because of exigencies of service, or because we have changed our critieria, or because we have decided to take a chance on him and it did not work, then we have to look after him and move him in such a way that he maintains his honour and his standing. Publicly shaming him will be unnecessary and counter-productive. That is not the way you manage people. Of course, if somebody is recalcitrant or non-performing, then, by all means, tar and feather him publicly and make an example of him. But fortunately, while there are some bad performers or non-performers in the service, the people who deserve this extreme treatment are few. Secondly, the question of risks and rewards of which much has been made. Starting with Mr Tay Beng Chuan, who said you cannot compare Ministers and AOs with entrepreneurs, like Bill Gates and Li Kashing, because they venture their own money, they make it, they make it big. If they do not, they are totally wiped out. Fair enough. But we are not doing that. We are comparing Ministers with the executives, professionals and managers, the people working for the entrepreneurs, like Bill Gates or Li Kashing, and they are paid well in the private sector. If you are a CEO of IBM, or Hewlett Packard, you are paid well. As Dr Tan Cheng Bock pointed out, very well in the US. In Singapore, not quite so well, but still, that is the group we are comparing with. That is the right level which we want to compare with. As Dr Ong Chit Chung pointed out, there is a perception that the civil service is an iron rice bowl and the private sector is much riskier. I would concede that the private sector environment is more volatile than the civil service, although I would not say that it is more risky than political office. Because in political office, you have totally no tenure at all. You have no contract. If you lose the elections, you are out. If you lose the confidence of the people, you are finished. And you cannot just go on to a new job easily because, having publicly not worked out, that is something which you carry on your CV for the rest of your life. So the comparison is not so extreme. And if you look at the private sector, if you are working for an MNC, or a large law firm, or an accounting firm, the risk is not so large. It is not one little boat in a great ocean. You are working on an ocean liner. IBM may go up or down. If you are Louis Gerstner, you have to turn it around. But if you are a top executive in IBM, working with the company, then you can expect a certain stability which may well be greater than the stability of many governments in the world. So there is a point, but it should not be overstated. Finally, the test is: with the pay which we have set, are people leaving the private sector to queue up to join the public service? Or are people queueing up to leave the public service and join the private sector? That is the test whether you have overpaid or underpaid. And by this criterion, there is no evidence that the civil service is overpaying people as a group. The way forward out of this issue is to move away from absolute job security, and not to pay less because you have greater job security. We have no more iron rice bowls in the civil service. I do not know where Mr Seng Han Thong used to see golden rice bowls. But I have never spotted any of them. If he does, I would appreciate it if he will let me know. But what we have done now to move towards less absolute job security, less absolute rewards is, firstly, to increase the performance bonus component substantially. And secondly, with the Public Service Leadership framework where we talk about the 10-year period of appointment at the DS level and 10 years at the PS level, that is a fixed term, rather than a lifetime commitment. It is a major step to take and newspapers have highlighted it and Members have caught on, but it is a step which we have to take carefully because it is a fundamental change and we better consider carefully that we do not go too far. We move and assess and, if need be, we move further but it is not something which you can adjust lightly. So there is a turnover. Even in the natural course of events, with the changes we are making, the turnover will be there and there is an acceptable rate. It will vary from service to service. But if the turnover is too low, it is also something to worry about. If you ask me now today, is there a problem, I will say, yes, because when you compare this year's turnover with last year's, it has gone up sharply, whether it is senior officers, whether it is the other services, it has gone up, compared to last year, and nothing else has changed except that the gap with the private sector has widened. Therefore, we believe that that is the main problem. Talking to the officers confirms this. We also have to make sure that other conditions are right, the challenge of the job, the working conditions, the way we treat our officers and plan their careers, these are things we have to look at too, but salary is something which you cannot ignore. And when we did our comparison with the private sector, we are not comparing with the top. We are saying, "Let us look at the 75th percentile of the private sector for the various services in the civil service." How do we compare? We found that the gap was quite large. In fact, the gap is about 20% but we decided that we will not close it completely. We will make this adjustment, that is, 13%, which I announced yesterday, and let us assess more carefully. Where we need, we can make a greater adjustment; where we do not, we can just hold it there. The third group of questions which MPs have raised is the possible deleterious side effects of this salary revision package. Mr Ang Mong Seng and Mr Chew Heng Ching asked whether the additional personnel cost is provided for in the budget. The answer is no. However, the budget surplus for this year which has been projected is sufficient to cover the additional cost, which is $400 million. Some Ministries may need to come back to Parliament and pass supplementary budgets in order to pay for this, but it will be done. Will the higher civil service salaries push up the cost of utilities, public transport and so on? Dr Vasoo and Mr Chew Heng Ching asked this. Because we are paying it out of the budget, the increases should not affect the cost of PUB utilities, public transport and so on. They have to move for other reasons. Anyway, public transport is not Government-run. Those are private companies. But in the cases where services are provided on a cost recovery basis, for example, healthcare, and where wages are a major component of the cost, then it is unavoidable that somehow or other patients have to bear at least part of the wage cost, whether it is 20%, whether it is 15% for the C class or whether it is 100% for the A class. A large part of what you pay goes towards the doctors and nurses, the hospital staff, not the x-ray machines and the operating theatres. But we have no choice. If we want better services, we need to pay the doctors and the nurses properly and this costs money. There was a letter in the Straits Times recently which said that the writer went to queue up at the polyclinic and he was made to wait a long time, and the doctor was harassed and packing up her bag while talking to him and so on. Why can't he have better services? But it costs money and one of the reasons the doctor appeared harassed is because we do not have enough doctors. We are not paying enough to the doctors in the polyclinics who are doing a heavy and difficult job, and we will have to raise the pay of the doctors in the polyclinic to improve the service, because the public does not tolerate poor service either and somehow or other, this expense has to be covered. I saw that Mr Lim Hng Kiang answered this question very carefully when he announced the doctor's salary revision a couple of days ago, but it is a reality. Personal services are expensive and, in fact, a major component of cost increases in the developed countries and it is going to affect us too. Mr Tay Beng Chuan, Dr Vasoo and Mr Chew Heng Ching asked about excessive civil service salary increases causing wage inflation. I would make three points. First, we are following, not leading the private sector. I have said this again but it is an important point. I think we have to say it repeatedly. We are not leading, we are not pushing it up. But we cannot be left behind too many steps. One step, yes, three steps, you can say that is the Asian style, walk three paces behind. But if you continue three paces behind for too long, your system is going to run into trouble. Secondly, I accept that making the Government a more competitive employer will mean making it more difficult for the private sector to recruit, especially to recruit from the public service. That cannot be helped. We cannot stand there and helplessly watch our lawyers leave, our nurses leave, our clerks leave, our senior officers leave and our Administrative Officers leave and say that this is good for the private sector. It may be good for the private sector in the short term, but if the Government falls down, that is very bad for the private sector. So we have to stay competitive. But we must also make sure that civil servants recruited by the Government are employed productively and justify their pay. When we take that person and put him in the Government, he is actually producing something and not just a drone, not just a parasite. Then he justifies his pay because otherwise, we are just going to have a large class of people sharpening pencils and pushing papers, and we will be wasting resources and causing wage inflation. The third point is that this year, we have put the Government salary revision and the NWC award together. It is two in one. Traditionally, the NWC award has been a benchmark for private sector NWC adjustments. But this year, because the two of them have been put together into one package, which includes the AVC, the extra performance bonus and monthly salaries, the total Government package, 13%, cannot be taken as the norm for private sector settlements. We are catching up and this package is not only NWC. There is salary adjustment to catch up. The private sector companies which have justification in salary adjustment can argue their own case, but I do not think it will be fair to use the civil service as a benchmark. Finally, Mr Simon Tay asked whether we could consult the private sector when the Government makes pay revisions. I am afraid the answer has to be no. The private sector does not consult us when they make pay revisions. We have no wage control or wage freeze and the Government cannot consult the private sector when we make our pay revision. It is not possible. We have to decide what is right and we have to judge. We have the responsibility and we have to answer for it. A fourth group of questions concerns the basic principle of paying the market rate for the job. Mr Tay Beng Chuan was the first to raise this, talking about the spirit of personal sacrifice which is required because of tripartism, because without sacrifice, leaders will not deserve respect, trust and confidence. And others too, including Mr Zulkifli and Mr Chiam, talked about moral authority. It is a basic point. There has to be, and there is some personal sacrifice involved in public service, otherwise, it would not be called public service. But the sacrifice cannot be so large as to put off able men. A business leader earns a full wage but he is respected for his business acumen, for his organisational skills, for his professionalism and the results he produces. Why should a political leader not be judged in the same way by his acumen, organisational skill, professionalism and the results he produces? If he is paid nothing and produces no results, he deserves no respect. If he is paid properly and he delivers results, I think he is fully entitled to respect. He is doing an honourable job. There is nothing improper or dishonourable about it. He should not enrich himself through public service but why does he have to make a large financial sacrifice just to prove his credentials? As Dr Ker Sin Tze has asked: can we find people who will do this in peaceful times? What Mr Tay Beng Chuan described and the other MPs also talked about is indeed the model in many countries. I say "model" in the sense that that is how it works, not that that is the ideal for us to follow. Actually, in some of these countries, it is the other way round. Politicians are not respected and the public refuses to support paying them properly and, therefore, they are unable to raise their wages. That is why the British Members of Parliament had to stand up and say, "We are very embarrassed to talk about this because the public will not countenance raising politicians' wages." And so too in other countries. I was just in Australia recently and the MPs said to me, "Your politicians are paid well." I said, "Yes, we have decided to make it a clean wage." They said, "If we did it here, we would be sacked. We would be out." They did not say, "Here, we all volunteer to sacrifice." But it just could not be done in their environment. I was talking to an American central banker and he asked about our wages - how big the gap was. He said that it was a real problem for him because the politicians' wages are not moved up, so his peoples' wages cannot go up. There is some sense of public service, so he still has some good officers. What is the problem? Because they have to send their children to college. So what he does is once a person comes in, if he thinks the chap is good, he moves him right to the top of his scale immediately. And he says, "You please save this money up, so when you reach the top of your career and you are still at that salary point, at least you would have been able to accumulate savings over the last five or ten years and would be able to send your children to college. You would not have to come and tell me that you have to resign to send your children to college." So it is a real problem. As for Bill Clinton, of whom much was made, the US Congress has decided that they are going to double the salaries, starting with the next President. They could not do it for themselves. It is politically untenable. But it is a problem and they are going to double it. When we say we follow the American example, I think we should understand what the American example entails. We have chosen a different formula. It has worked for us, and I think we better keep it. I would not shy away from this transparency by moderating the salary increase using supplementary incentives and rewards, as Mr Tay Beng Chuan pointed out. We go for a clean wage. What we declare is what the Ministers get. It is more transparent. It is more sensible. It is better to pay $968,000 and be honest and open about it than to pay a small nominal wage and top it up with perks. Perks cause money too - to provide maids, cars, houses, free holidays and education for children is very expensive. Besides, we will be generating a privileged class of people who then will start arguing what car you are entitled to, which holiday are you allowed to go, can you travel first-class or business class on holiday and so on. So as Dr Tan Cheng Bock pointed out, we show all components. Mr Low Thia Khiang said that we are not transparent enough. What else is there which we have not declared, which is not in the Table I handed out yesterday? There is nothing, that is it. It is broken down in many different pieces because there are different purposes, bonuses, allowances and so on, but all the pieces are declared and however many pieces there are, it adds up to that total sum of money. And if you want to know what the pieces are, the Straits Times has done its homework. Instead of asking your Legislative Assistants, you can look up the Straits Times today and it provides a neat little tabulation of what the Superscale G salary consists of, what the Staff Grade I salary consists of. There is nothing else. Going on from the principle, MPs also argued about the detailed basis of the benchmark. Mr Iswaran asked: does it include foreigners? Does it include bankers who are entrepreneurs? The answer is no. The benchmark only includes Singaporeans and also Malaysians who are Permanent Residents in Singapore, because that is really one labour market. Foreigners are out and bankers who are entrepreneurs are also explicitly excluded. This has always been the case, it is nothing new. Members may have forgotten or may not have been present at the last debate, I think it is worth clarifying. Another major point made is that the list of top earners changes every year, and therefore Ministers earn much more than any person outside. Mr Shanmugam raised this. Mr Ang Mong Seng said that it is like two aeroplanes, one of which is in the air all the time. Mr Chiam See Tong raised this, and Dr Tan Cheng Bock suggested that maybe out of the 48, we have 24 people fixed, and 24 people change from year to year. I am not sure how you fix them, because sometimes they grow old, they retire and sometimes they change jobs. But I understand the sentiment of it. There are several answers to this. The first answer is that Ministers and civil servants also have no permanence. We are not here forever. We are here while we are doing the job. When we are no longer the Minister, we are out. Our aeroplane has landed. How much should they be paid while they are doing the job - an amount comparable to what top executives with similar responsibilities earn in the private sector. It is possible to have an alternative approach, as Mr Zulkifli has suggested. Get a pay consultant, make pay comparisons, survey the industry, identify other firms against which you are comparing yourself, benchmarking yourself or against which you are competing, and then ascertain how much executives in these firms are paid. It is a way private sector companies do it, and it is a practical approach. We studied it quite extensively in this review before finally deciding, no, we better go back to the old approach of highest paid. There are two reasons. First, because the process cannot be totally transparent or automatic. There is judgment. You have to decide whom to include, whom to exclude, and you will have to review the list of companies from year to year. It is not a fixed list. Then you have to look at the companies and say, "Is it a foreigner or not?" And too much judgment goes in for it to be an automatic formula. The second reason is that if we do it that way by using a private survey, the data would be less reliable than the IRAS' data. IRAS sees your total pay, or at least they have a fairly good sense of what your total pay is. And if they have any doubt that that is your total pay, they will look into the matter and satisfy themselves as to what the truth is. Pay consultants - Towers Perrin, A T Kearney or whoever it is - do not have quite the same binocular and telescopic vision in these matters. They have an impression. It is not quite as accurate. I think, overall, for purposes of automatically computing a benchmark, it is better just to use the top earners as a proxy for the leaders in each profession. There is some bias, because the top earners change from year to year, and there is a certain amount of randomness. Maybe by chance, that person's business was good and he was ranked high that year. But then so too with the top companies, because companies go up, go down, and I will have to continue to compare against the top companies. We have tried to minimise the bias. First, by increasing the samples from 24 to 48; secondly, by using the median instead of the mean. And also the two-thirds factor which we apply to the benchmark tends to go on the opposite direction to bring down your numbers. So that also compensates. Finally, our answer is $968,000, ranked 367th amongst private sector earners, based on this year's revision or if we went for the full benchmark, $1.21 million, ranked 206th. And I think that is an eminently reasonable outcome. There were many other suggestions made by other MPs. Mr Iswaran said why not just use the 200th ranking private sector earner. Dr Tan Cheng Bock said why not cap the size of the stock option gains, maybe at $1 million. We can do many of these things. Numerically, I think, one way or the other, it would come out at about the same place. But we are looking for sound rationale to make the comparison, because the benchmark is not only a numerical formula, it is also a statement of where you peg your Ministers, in terms of responsibility and job scope. What is the group against which we should rank our Ministers and compare their outcomes? And we say we should rank against the top professionals and executives in the private sector with general management responsibilities. That was the definition in the White Paper and I think that is the right definition. In other words, I want to compare our people - the Ministers and the Staff Grade I Permanent Secretaries - with people in the private sector holding that level of jobs with that standing in their professions. So I am really talking about the top 24 people - four professions times six. But to give my number more stability, to make some adjustment, in case the top man happens not to have top pay that year, so, all right, we have decided we will go to 48 people instead of 24. And it is still representative, but stabler. This is different from saying I will aim for number 200 or 367, because I am not aiming just for the number. I am aiming for that category and, as I will show later, number 367 includes many people in front of it. As Mr Noris Ong says, very sensibly, finally, you are looking for a reality check. Do not get caught up on the technical details of how the benchmark is calculated. Just have a reality check; is the outcome reasonable, rank 200th for the full benchmark, rank 367th for the present adjustment? I think, on that basis, we pass the reality check. I would not go for a link to the median per capita income and multiply by X, as Mr Simon Tay suggested. We have a component in the package which is linked to GDP. I think it is the most comprehensive single indicator of the overall performance of the economy, rather than any sub-group. And we really want growth, because growth is the first target. With growth, you can have distribution. If you start with distribution and then hope to have growth, you are getting it the wrong way around. So I would stick to GDP and I would stick to the basic principle that we are comparing against the top people in the private sector, and that is what I want to measure against. Whatever the formula, the next question is: is the quantum reasonable? This question was asked in different ways, firstly, by Mr Seng Han Thong and Mr Chay Wai Chuen who wanted to know what professions are the 366 or 367 people who earn more than the benchmark. The Clerk will now distribute the Tables (Cols. 631-634) . We have tabulated them and you can see who these people are or at least what professions they are in. Table 1 - Professions of Top 366 Earners (Cols. 631 - 634) These are the 366 people who earned more than the benchmark, namely, $968,000 in 1998 and assessed in 1999. You can see that they belong to a wide range of professions - accountants, bankers, manufacturers. The legal services are right at the top, large numbers. These are the ones that we are comparing against. The one group we are comparing against, not figured here, are the engineers who earn less. But then there are many other professions who also are represented in the top 366 people - real estate, medical services, ie, doctors, computer services, hospitality services, market research, luxury goods, advertising. I think if you ask whether the Minister ought to be better than some of the people on this list, I would say yes. And if he is not better than somebody on this list, then he should not be a Minister. So I think that the figure is a reasonable figure. Now, look at the second page of Tables 2 and 3 (Cols. 635-636), to have a look at what the individual six professions in the benchmark actually earn. Table 2 shows the range of the eight people in each profession. The bankers earn $2.2-$4.5 million. Lawyers earn $1.5-$2.8 million. That is completely typical. Accountants earn $2-$2.3 million, and so on. Engineers earn less - $0.5-$0.8 million, but that is really because a lot of engineers have become CEOs of companies and are not captured as professional engineers on this chart. Tables 2 and 3 - Earning ranges of top 8 earners in 6 professions (Cols 635-636) If you discount for stock option gains because you think they are volatile and discount by 50%, the numbers actually come out about the same. The only people who are affected are those working in multi-nationals who come down, both the lowest and highest. And the local manufacturers who come down for the lowest earner. The highest did not change. So it really does not make much difference. I think you can see that a lot of people are in these income brackets. These are not fictitious figures. We excluded doctors from the benchmark but, as you can see from the list on the first page, there are a lot of doctors who are in this earning category - 11 people are in medical services. And if you ask about the top eight doctors, because Mr Simon Tay mentioned doctors and I think Dr Michael Lim too, they earn between $1.12 million and $2.48 million. It is a little bit less than lawyers. So doctors have to care for their patients, not just care for their fees, but doctors do not earn negligible fees, which is why we have had to make significant adjustments to doctors' salaries in the public sector. The question of stock options which Dr Tan Cheng Bock focused on, I have shown from the Table that they actually did not make much difference in the past. In the future, I think they will make a difference to the multi-nationals, to the local manufacturers. They were not figured for lawyers, accountants and engineers because there you are talking about principal earned income from their partnerships. So they do not get stock options from their partnerships, unless one day we allow our law firms to become lawfirm.com. When that day comes, we will have another debate in the House. With the way we are calculating the benchmark now, namely, depending on the median, because we have these professions - lawyers, engineers and accountants, at least, and probably also the bankers for now - without stock options, even if the people who have stock options have inflated options, it is not going to make a disproportionate move to your median, because they will be the few at the top, unless all 24 people have huge stock options and therefore it affects your median. If that happens, we will look at it again. I do not think that is imminent. So the conclusion from this is that the adjustment is well justified. There was one group which I must confess which we accidentally omitted to mention although we did not omit to consider them, and this was pointed out by Mr Simon Tay and by a few other Members privately, and this has to do with the Nominated MP's allowance. This will be adjusted in step with the MP's allowance, and so too the NCMP's allowance, proportionately. We are completely fair and equal in these matters. Finally, may I pay some attention to the speakers whom I have agreed with, as opposed to speakers where we have some difference of views. Prof. Chin Tet Yung, Mr Iswaran and Mr Ong Ah Heng urged us to restore the CPF as soon as possible. I fully agree. We have accepted the NWC's recommendation to bring forward the next step to January 2001, and we have said that we will announce in October how big this next step will be. We have to keep faith with the workers. When we told them that things were bad and to cut, they cut and agreed. Now that things are good and they want to restore it, we also want to restore it, and it has to be restored as soon as possible. 2% has already come and I look forward to another adjustment on 1st January. But I think underlying this question is a different question, which was what Mr Sin Boon Ann explicitly articulated, and that was why we move Ministers' salaries now before the full CPF restoration. Let me turn the question around and ask: now that the economy is recovering, is the private sector continuing to freeze its salaries? No, before CPF full restoration, it is moving up. In fact, it is one reason why we are bringing forward the CPF restoration. If the private sector is not freezing salaries, should we hold back all of the civil service salary revisions until the CPF is fully restored? I think the answer has to be no, because if we did hold back, we are being unfair to the civil servants and we are going to lose more good officers, and the best ones are the ones who are going to go first. Then we would have the real problem which the MPs worry about of people who are free-riding and under-performing. So should we move for the whole public sector but leave out the Ministers? I think that would be wrong too. Because it would show that we lack faith in our own argument that the Ministers' pay should follow the benchmark and the benchmark should follow the private sector up and down. We have argued and debated this. We have decided that the benchmark is the way to go because we want to move with the private sector, not automatically up alone, but both up and down. In an exceptional situation when we are faced with a crisis, we froze the benchmark in 1998 and 1999. The crisis is past and the economy is recovering. It is on the way up. I think the right thing to do is to move for the Ministers' salaries to catch up, but 80% of the full benchmark, and we phase out the adjustment over three years. I think that is eminently fair. Mr Chay Wai Chuen and Mr Thomas Thomas asked the Government to re-commit itself to promoting social mobility and flexibility. I fully agree with them. I also particularly agree with Mr Thomas Thomas that in the US, although income disparities are large, social mobility is significant. The US social attitude towards the successful ones who make it big are positive, because everybody hopes also to do the same and to rise, and thinks that he has a chance to get there. It is the major reason why in the US they have social stability and the income gap is not a political problem. Income distributions are stretching out but this does not mean that hope is extinguished. So long as we keep our society open and we help all citizens to start out in life with education, good health care, with a home, and we give talent from all backgrounds every opportunity to succeed, I think that is to our benefit that we have these high peaks. They will bring others along and lift up the average for the whole society. If we push the peaks down we are not going to raise the rest of the society. We are going to push everybody down. We have to continue to look after low income groups and create more jobs for all. As Mr Ravindran and Dr Jennifer Lee said, and Mr Yeo Guat Kwang put it in Chinese, not only Jin shang tian hua but also Xue zhong song tan not just add a rosette on to your brocade but also send coals in the snow to a needy person. I fully agree. The strategy should be what Mr Chay Wai Chuen explained, which is to uplift the lower income households and not focus on the income gap per se. What is important is the level of the lower income group. That Dr Jennifer Lee is able to say the $1,000 to $3,000 household income group is something to worry about is a great tribute to Singapore. Because in any other Asian country, if one is earning from $1,000 to $3,000 household income, owning a house with a television set, washing machine, telephone and probably handphone and a CD player, one would be very comfortably off. In China, they would consider that an enormous achievement, and in many other countries in Asia too. But in Singapore, because we have succeeded in uplifting our people en masse, even the lower income groups are $1,000 to $3,000 and have considerable assets to their name. I am not saying we should rest on our laurels. We should continue to work and uplift this group further. But that this group is already in a considerably privileged position compared to any similar stratum in any other Asian society, that is not in doubt. Finally, the crucial point, which Mr Lim Boon Heng made eloquently yesterday, that we must attract talent to come to Singapore. We must retain talent, get Singaporeans back to Singapore and we must have good government. Because without good government, we can have very hardworking and talented people, but we are going to have a lot of hardship and suffering. This is crucial. The future of all Singaporeans depends on this and our revisions will help to achieve this. MPs have understood this. Therefore, they have supported this policy. I would like to thank all the MPs for their contributions. I think what we need to do now is to work together with them to raise the standards of public service and Government, to get people who are idealistic, committed, patriotic and capable to come forward and serve Singapore and to bring about a better future that we all aspire to. [Applause.]

Sir, may I seek clarification with the DPM? I refer to Handout 2 that DPM distributed in Parliament yesterday. Is the salary figure in that Table inclusive of AVC, bonuses, etc? Is it a gross figure or a basic figure?

It is a gross figure. It includes everything. It includes the monthly pay, AVC, Special Allowance, which the Ministers have been getting one month, Public Service Leadership Allowance, which we are introducing, car allowance, which has always been there and is tax free. So we actually imputed on top of the car allowance the amount of tax which would have been paid if it were taxable and added that into the bundle as well the performance bonus and the GDP bonus. It is all listed out in the Straits Times. Go and check it up there.

Before I take the vote, can I just remind hon. Members that we still have a number of items on the Order Paper to clear. So please do not forget to come back on Monday.

Resolved, That Parliament do now adjourn. Adjourned accordingly at Twenty-two Minutes past six o'clock pm.

asked the Deputy Prime Minister (a) what is the status of the process to merge the local banks; (b) whether there has been any change in the policy to encourage local banks to merge; and (c) whether there are further liberalization policies to open up the banking and financial sector.

MAS' view on bank consolidation remains unchanged - that the Singapore market is too small to support more than two major local banks, and that further consolidation and mergers will help banks to achieve economies of scale and compete internationally, or at least regionally. Nevertheless, the decision to merge has to be made by the local banks' managements and shareholders. MAS can only encourage, not dictate. There have been no moves by the local banks to merge so far. As competition intensifies in the banking industry, through the progress of technology and our liberalisation measures, the pressure on banks to consolidate and rationalise will grow. Alternatively, banks can choose to become niche players in specific segments. The measures to open up the domestic banking market that MAS announced in May 1999 were the first instalment of a five year programme to liberalise the industry. MAS will review the position next year before deciding on the next package of measures. Table - Performance Bonus Distribution for Political Office-holders (Cols. 629-630) Table 1 - Professions of Top 366 Earners (Cols. 631 - 634) Tables 2 and 3 - Earning ranges of top 8 earners in 6 professions (Cols 635-636)