For reality check, compare their pay with that of bosses

But PM remains open to refinements in benchmark if needed


AT THE end of the day, after the benchmarks have been formulated and the numbers crunched, Prime Minister Lee Hsien Loong applies his own reality check for ministerial salaries.

And here, he asks himself two questions: The first is whether there are really 206 private sector jobs that are more important than that of a minister.

He was referring to the fact that the 'MR4' benchmark salary for ministers and top civil servants was ranked 206th among 1,000 top earners in 1999. It moved up to 201st last year.

'Are there 206 jobs in the private sector which are more important than being a minister and being a senior permanent secretary?

'Fifty maybe, 100 possibly, 200? I don't believe so,' said Mr Lee yesterday in a speech to wrap up the three-day debate on ministerial salaries.

The second 'reality check' he applies is to compare the benchmark salary against what head honchos in Singapore's top listed companies are earning.

Distributing a table showing the top 55 earners in listed companies included in the Straits Times Index, he said that the median pay of these corporate chieftains is around $1.75 million a year.

'My ministers are earning $2.2 million. I think we passed the sanity check,' he said.

This is especially since, going by the list, that median salary would be drawn by a CEO of a company that was worth only about $4 billion to $5 billion on the stock market.

This is much smaller than the size of Singapore Inc, he noted. Even Singapore's largest company in terms of market capitalisation - SingTel at $50 billion - is comparatively small.

'If Singapore Inc were a listed company, what would its market capitalisation be? Think about it,' said Mr Lee.

'My GDP, which is the profit earned in a year by Singapore Inc, is $210 billion,' he said.

'The average price earnings ratio on the Singapore Exchange is now 20. So if I calculated a market capitalisation - if Singapore Inc went for IPO - this is a $4 trillion dollar company.

'We are well within the right ball park for what these jobs are worth as ministers.'

Still, Mr Lee said that he was open to refining the benchmark if necessary. But any changes would be done incrementally.

MPs had voiced a whole slew of suggestions, including Ms Denise Phua (Jalan Besar GRC) who suggested changing the benchmark to a range, instead of a point.

Mr Lee said that the Government effectively does have a range of salaries.

For example, an acting minister is a senior minister of state, so he receives one grade below the MR4 benchmark - the SR5 salary. And there is room for him to be promoted above the MR4 benchmark to MR3 and so on.

One suggestion that Mr Lee dismissed was for ministers' pay to be benchmarked to that of their previous professions.

'There was one letter in The Straits Times which says Dr Lee Boon Yang is a vet, so you should pay him a vet's salary.

'But Dr Lee Boon Yang is not just a vet. He was a vet,' said Mr Lee.

'He proved himself each step, steady, had judgment, can size up people, can get good people to work for him and get things done. So such a person can do many things whatever his original training.'

Another example is engineers-turned-politicians.

'They say engineers, you're paid $600,000 and therefore so many engineers in Cabinet, that's what you should be paid,' said Mr Lee.

Yet as Ms Lee Bee Wah (Ang Mo Kio GRC) had pointed out earlier, quite a number of engineers have moved on to become chief executives and earn much more, he added.

Mr Lee also noted that other countries also face similar problems over the pay of political leaders.

'It's not true that low pay works better for them. The reality is they can't muster the political consensus to pay more realistic salaries because the politicians are in low standing, the public will not support it,' he said.

He cited the example of the United States, which established a market-based framework in 1989 to adjust government salaries annually based on increases in private sector wages.

But the US Congress never did the yearly adjustments for fear of a public backlash.

'So now the whole system is stuck,' said Mr Lee.

Judges in particular are affected because their salaries are linked to that earned by members of Congress, leading to what has been called a 'constitutional crisis' - a point also raised by Mr K. Shanmugam (Sembawang GRC) on Tuesday.

Mr Lee also addressed the point raised by MPs that an independent pay commission be set up to decide on public sector salaries.

'I don't believe this will settle the matter because whatever the commission recommends, finally the responsibility comes back to the political leadership. The buck stops here,' he said.

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A WARNING ON LOW PAY - FROM U.S. CHIEF JUSTICE

'The dramatic erosion of judicial compensation will inevitably result in a decline in the quality of persons willing to accept a lifetime appointment as a federal judge. Our judiciary will not properly serve its constitutional role if it is restricted to, firstly, persons so wealthy that they can afford to be indifferent to the level of judicial compensation, or secondly, people for whom the judicial salary represents a pay increase.

Do not get me wrong - there are very good judges in both of these categories. But a judiciary drawn more and more from only those categories would not be the sort of judiciary on which we have historically depended to protect the rule of law in this country.'

PM LEE read out this quote from US Chief Justice John Roberts warning of the consequences if judges continued to get low salaries.