EXTRACT OF SPEECH BY MR LEE KUAN YEW, THEN SENIOR MINISTER, TO THE NATIONAL TRADE UNION CONGRESS AT THE SINGAPORE CONFERENCE HALL ON 19 JULY 1996.
Ministers who deal with billions of dollars cannot be paid low salaries without risking a system malfunction. Low salaries will not attract able men who are or can be successful in their professions or business. Low salaries will draw in the hypocrites who sweet talk their way into power in the name of public services, but once in charge will show their true colour, and ruin the country. This has happened in many countries.
We need dedicated and committed Ministers, but we cannot require them in today’s social climate to sacrifice like a Mother Theresa. Sacrifice for country must be within a realistic setting of present. It is like our National Day Parade. In the 1960’s we gave the marchers soft drinks and cakes. Now they are fitted out in the best T-shirts, jeans, and jogging shoes. Ministers’ wives and children are normal human beings, who have normal aspirations like the wives and children of their husband’s peers. We have to recognize the different social climate after many years of prosperity.
In the last 15 years as our economic circumstances improved and social attitudes changed. I moved ministerial salaries towards the market salaries for top executives and professionals to keep up with the times. The challenge of survival in the early revolutionary years, when it was do or die, has passed. It was impractical to depend solely on the spirit of national service to get good men and women to serve in government.
If Ministers were just ordinary people with average capabilities, Singapore would have failed. High performance in any organization depends on top class leaders. Microsoft came up from scratch in less than 20 years to become a multi-billion dollar business because it had a great entrepreneur with a top rate mind in Bill Gates. Chrysler Motors would have gone bankrupt had they not found Iacocca, a great corporate leader, who rescued Chrysler and turned it around.
It is better to work for a company with a top quality CEO than a mediocre one. So it is safer to be in a country with top quality men and women in charge. But amazingly throughout most of the contemporary western world, leaders in government require no special training or qualification. Many get elected because they sound and look good on television. The results have been unhappy for their voters.
In Singapore we have made sure that before Ministers are put in charge of the government, they are first trained and tested. This has ensured Singapore’s continued success. The second generation leaders had been tested and had proved themselves before they took charge. They had proved they were able to analyse problems, plan solutions and implement them. They have imbibed the experience of the first generation leaders and learned from past mistakes. Running a government is more difficult than running a company, because a Minister needs to be able to run a Ministry and to persuade people to support tough policies. Ministers who cannot persuade people to support their policies must fail.
For the past several years I have been urging the Prime Minister, Goh Chok Tong, to change from fixed salaries to a formula which pegs and links the salaries of Ministers, judges and civil servants in government to the private sector, to pay them 2/3 of the salaries of the private sector top executives according to income tax returns.
Editors in SPH who are in touch with public opinion told me that the people accept the principle of pegging Ministers’ salaries to the top men in the private sector, but to many people the top salaries are too large. So I called for the Income Tax figures, minus the names, but giving the occupations. The figures show how much Singapore has grown and how big Singapore salaries and incomes have become.
Therefore the pay of civil servants, the permanent secretaries and their deputies, judges, government engineers, doctors, have to go up. The total sum paid to Ministers and Ministers of State is still small money, $23 million for 1996. Bear in mind that our GDP for 1995 was $121 billion. Real growth this year is expected to be 8%, making for a GDP of more than $130 billion. When I first became Prime Minister in 1959, our GDP was $2 billion. My colleagues and I made it grow to more than $130 billion. After discounting for inflation, this is an increase of 20 times in real terms.
No lawyer complains about the pay of judges, which is 2/3 of what good lawyers earned two years ago. The Chief Justice gets $1.4 million. A top lawyer makes more than $2.5 million. The Chief Justice does work of more importance, and of greater value to the country than the best lawyer in town. The Prime Minister does more important work than the Chief Justice. He should not be the Prime Minister if he is not capable of doing the job, and that goes for the other ministers. As Singapore prospers, especially at a time when the whole region is booming, private sector salaries are going up for top men.
The incomes of very successful Singaporeans, those with top professional skills, managerial ability, business acumen and drive, will rise much more. This group are the 5% to 10% of the population that are well trained, professionally qualified or resourceful. Not all Singaporeans can become entrepreneurs or professionals. But given the proper training and education, nearly all can become skilled technicians or workers. Although not doing as well as the entrepreneurs and top professionals, they too will be in demand in the global economy and will do well.
Pegging salary scales to the market means that when the market turns down during a recession, and the salaries of top men in the private sector go down, so will those of the Ministers, with a two-year time lag. And every year the Prime Minister has to make an appraisal of the work of his Ministers to decide the performance bonus. He has to judge their standard of work, he consults his inner team to cross check on the quality of their work. He has to monitor their work. It is quality control.
In the end, after all the arguments, you have to go by the person whose judgment you can trust. You know my judgment has been tested time and again in the last 37 years since 1959. I know Singapore as it was in 1950’s, and how it got from riots, disorder and heavy unemployment, to what it is today, stable and prosperous with full employment and high wages. I know what it needed to move Singapore ahead in the way it has progressed.
The crux of the problem is an emotional one. People in Singapore have got so accustomed in the last 30 years to Ministers being paid well below their private sector pay and having to sacrifice to take office, the thought that a Minister is paid 2/3 of the best 24 in the private sector arouses unhappiness, even envy.
I cannot solve these emotional reactions by argument. In my judgment, the long term consequences of continuing with the old system will be a lowering of the quality of people entering politics and taking office, and gradual but inevitable corruption that will creep in as mediocrities as Ministers exercise immense powers over our resources of $127 billion increasing at 8% every year.
They will end up with side benefits, as happens in nearly all countries in Asia. (Compare our MRT with Taiwan’s and Thailand’s)*
I have bucked and gone against popular sentiments and conventional wisdom on several major issues in the past and been proved right. For example I decided that individual accounts (CPF) for retirement was right and rejected the buffet or collective pension fund which has got the advanced countries into grave financial difficulties.
I have also instituted individual accounts for Medisave, plus insurance cover for Medishield against catastrophic illnesses. It has proved right as against the problems which free medical service like the National Health Service in Britain, France, Germany has brought them, or the open system of private insurance in America. (Lancet praised our Medisave)
What I did was against popular thinking in Singapore at the time, thinking which was influenced by what Britain and Europe were doing then. Time has proved me right.
Time will prove that I am right that Ministers should be paid 2/3 of their private sector counterparts’ salaries of two years ago. This is the way to ensure that our government and system stay clean and honest, with able and dedicated men, who can stay in office for several terms, and develop the judgment that comes with experience. You need Ministers who will work for the public benefit, without having to worry about their families, or worse put aside a private pension for them.
If salaries pegged to the market do not work, then not much will be lost, except a few million dollars. Singapore can always go back to the old system of paying Ministers much lower than the market rate, and hoping for the best. World-wide, this has been shown not to have drawn in the best into government.
The best in America become corporate chiefs, CEO’s of top corporations, each an empire. The same thing is happening in Europeand in Japan. In Asia, becoming ministers has become big business. Businessmen supported by racketeers and with large funds, get elected. Then they have to repay their friends with lucrative contracts and also recoup their expenditures. Seldom do they have the ability to run the economy. The results for the economy and for the people have been dismal. If in spite of market pegged salaries we get mediocrities in government, then Singapore can go back to mediocre wages for mediocre Ministers.
At a next election, the opposition can offer to be the government for onehalf or one-quarter of the price. But ask them to name their would be Prime Minister for Finance and minister for Defense. Singaporeans can then choose.
I have gone through many difficulties and crises and taken Singapore to where it is today. This pay is realistic and necessary to keep honest and able Ministers in office for several terms. This is the way to ensure that your properties will double in value in the next 10 years, with the main and interim upgrading programmes, with better infrastructure in an extended MRT, the North East line, with light rail systems in more new towns, with tunnels to allow more cars on the road, and ERP.
Good government will make your shares and stocks double and treble in numbers and in value. Your incomes will double in 10 years, and the Singapore dollar will increase in value and make your holidays and our imports cheaper. Our asset -enhancement programmes – Edusave, Share Ownership Top-ups (SOTUS), and HDB upgrading – have increased your security against future contingencies. On the contrary, a corrupt and incompetent government will destroy everything we have built in the last thirty-seven years. Everything will go down: the value of your Singapore dollar, the value of your properties, your stocks, your savings, your jobs, and your children’s future.
Please do not forget, we are not an ordinary country. Ordinary men cannot run Singapore. If my old guard colleagues were ordinary men, there would not be today’s Singapore. The key leaders in this present government are not ordinary men. The old guard had spent many years to select, train, test and prepare them for the job. And they have shown their ability to adapt and make the system work under changed conditions.