Speech by Deputy Prime Minister Teo Chee Hean at Committee of Supply 2018

Thank you Chairman, Sir. 

1. Before I begin on the work of the Public Service, let me address the points raised by MPs Mr Vikram Nair, Mr Liang Eng Hwa and Mr Alex Yam, on the salary framework for political office holders. The current framework is based on the 2012 White Paper on Salaries for a Capable and Committed Government. Members may recall that the Prime Minister appointed an independent Committee in May 2011 to review the basis and level of political salaries to help ensure honest and competent government. The Committee’s recommendations, contained in the white paper were thoroughly debated over three days in this House and endorsed in January 2012. The endorsed salary framework was implemented with effect from May 2011. 

2. I last updated this House on this subject during the 2015 Committee of Supply. I had informed the House that the salary framework was working well, and that the Government was maintaining the salary level established by the 2011 Review Committee. 

Formation of 2017 Committee

3. The 2011 Committee had suggested reviewing the salary scheme after five years. In line with this, the Prime Minister formed a fresh committee last year to review whether the salary framework remains appropriate and valid against its intended goals, and what adjustments may be useful; and whether there is a need to adjust the salaries should there be a change in overall salary levels based on the proposed framework. 

4. The Committee’s conclusion is that the scheme remains relevant and sound, but the Committee recommended adjusting the salary levels to match the updated benchmark, and also some fine tuning of the National Bonus conditions. The Prime Minister has written to the Committee to thank the Committee for its work and the well-considered recommendations. The Government has decided that since the scheme remains valid and the economy is still in transition, we will not change anything now and will maintain the current salary structure and level. We will review the matter again after five years or when it becomes necessary. 

5. Mr Chairman, the 2017 Committee comprised nine members, headed by the 2011 Committee Chairman, Dr Gerard Ee. The other eight members were Dr Abdul Razakjr Omar, Mr Thomas Chua, Mrs Fang Ai Lian, Ms Euleen Goh, Mr Stephen Lee, Ms Mary Liew, Mr Ramasamy Dhinakaran and Mrs Mildred Tan. These independent members are experienced and well-established in a range of sectors – social and community service, business, trade unions and professional services. Two of these eight members, Mrs Fang Ai Lian and Mr Stephen Lee, served on the 2011 Committee, while six were new.

Committee’s Recommendations

6. The 2017 Committee reviewed the salary framework and submitted its views and recommendations to the Prime Minister in December last year. 

7. Let me now take the House through the substance of the Committee’s views and recommendations. 

8. First, the Committee reaffirmed that the current salary framework laid out in the 2012 White Paper is a simple and effective salary framework for political appointment holders and MPs, and remains true to the three key principles which this House had arrived at a consensus on in 2012. In fact, this consensus on the principles included members of the Opposition. And these three principles are: 

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

b) Two, the ethos of political service entails making sacrifices and hence there should be a discount in the pay formula; and

c) Three, there should be a “clean wage” with no hidden perks.

The salaries should be linked to the individual performance of political appointment holders, and the socio-economic progress of Singapore Citizens.

9. The 2017 Committee affirmed that these principles remain relevant and should be retained. These principles form the cornerstone of a system that ensures competitive salaries while maintaining transparency and accountability.

10. Second, the Committee assessed that the current salary benchmark strikes a good balance between paying competitive salaries and displaying the ethos of political service, and recommends continuing the use of this benchmark to determine the total annual salary of a Minister at the grade of MR4. The salary benchmark which is based on the median income of the top 1,000 earners who are Singapore Citizens, reflects the calibre of the people Singapore needs for good government; while the 40% discount from this signifies the ethos of political service. 

11. Third, the Committee recommended retaining the current pay structure for political appointment holders. The Committee assessed that the structure is simple and easy to understand. There are direct links to individual performance and national outcomes. All salary components are clearly spelt out with no hidden benefits, and all salary components are part of the benchmark. In particular, the Committee reviewed the existing indicators in the National Bonus framework and recommended retaining them as they adequately covered the spectrum of the Government’s efforts at the macro level. The National Bonus is linked to Real GDP Growth Rate which tracks how well Singapore is growing economically as a country, and Unemployment Rate of Singapore Citizens which tracks whether growth translates to jobs for Singaporeans. The income-related indicators reflect whether jobs translate to better income for all Singaporeans, including average and lower wage workers.

12. However, the Committee has also recommended a few adjustments: 

a) One, to adjust political salaries annually in line with annual benchmark movements. On this, the Committee noted that the benchmark has increased by 9% since 2011, or a compounded growth rate of 1.5 % per year over this period, but there has been no adjustment made to political salaries over the period;

b) Two, to review the ranges for the National Bonus indicators to take into consideration changing economic conditions and national outlook; and

c) Three, to adjust the allowance for NCMPs from 15% of the allowance for elected MPs to 20% to recognise that NCMPs have full voting rights in Parliament from April 2017.

Government’s Decision to Maintain Current Salary Structure and Level

13. As I had stated earlier, the Prime Minister has written to the Committee to thank the Committee for its work and its well-considered recommendations. However, the Government has decided not to make any changes, and to maintain the current salary structure and level. 

14. Let me explain why.

15. The Committee has affirmed that the current salary structure for political appointment holders, including the National Bonus framework, remains relevant and sound. Therefore, we should maintain this structure. 

16. While the MR4 benchmark has increased by 9% since 2011, or a compounded growth rate of 1.5% per year over this period, the Government notes that the 2017 MR4 benchmark is lower than the 2016 MR4 benchmark. Hence, the Government has decided to maintain salaries at the current level and watch salary trends further. 
(With your permission Mr Chairman, may I ask the Clerks to distribute Chart 1 on the salary benchmark since 2011)

17. The Government has also decided to maintain the current National Bonus indicators and not make refinements to the ranges for the National Bonus indicators. The economy is going through a period of transition, and the Government has decided to watch the changing economic conditions and outlook further rather than making any refinements now.

18. The Government has also decided to maintain NCMP allowance at the current level and consider any change when other salary adjustments need to be made. 

19. So Mr Chairman, if I may summarise, the 2017 Committee has reviewed and reaffirmed the key principles that form the underlying basis for determining political salaries. The Committee is also of the view that the existing salary framework remains relevant and sound in ensuring a flow of capable leaders committed to the continued success of Singapore and Singaporeans. The Committee has also recommended that salaries be adjusted by 9%, together with some refinements to the elements within the framework. The Government has decided not to make any changes, and to maintain the current salary framework and salary level.

20. The Government will, of course, keep this House fully informed of any changes to the salary structure or level. 

21. I have taken members through the substance of the views and recommendations of the Committee. The Government is releasing the Review Committee’s Report. 

22. Now, Mr Chairman, let me thank the Members for their views and their continued support for the work of our public officers. 

23. Over the past few days, Members debated how to position Singapore on a firmer footing for our future generations. We are progressing well on our economic transformation, with the Public Service working closely with industry, our unions and workers to deepen their skills, and prepare for the future. 

Strengthening our Institutions and Helping Our People Succeed

24. The PMO-Strategy Group is working closely with our agencies and other central agencies such as the Ministry of Finance and the Public Service Division to adopt a systems approach to planning and coordination. This includes areas such as scenario planning, budget, manpower, population, land, security, climate change and new opportunities in the Digital and Future Economy. We have formed the Smart Nation and Digital Government Group last May to accelerate our Smart Nation efforts. 

25. Dr Fatimah Lateef and Mr Lee Yi Shyan cited demographic challenges, which stem from our low total fertility rate.  Agencies have worked together to strengthen our support for marriage and parenthood in the key areas of housing, pre-school, and support in the workplace and the community. Minister Josephine Teo will give an update of our population priorities and strategies to ensure that we are well-prepared for the future later on during this Committee of Supply for PMO.

26. Climate change is also a whole-of-nation issue where all countries need to take action now to safeguard our collective future.  Together with other countries, Singapore will do our part to reduce our emissions. To do so in a cost-effective manner, the carbon tax is a decisive move. Its merits were discussed extensively during the Budget debate. The transition period and support will also help our companies and consumers make the adjustments. Minister Masagos Zulkifli will provide more details in his speech on our implementation plans in the Committee of Supply for the Ministry of the Environment and Water Resources. 

27. Singapore needs to remain economically competitive, and be a smart, green and liveable city with opportunities for Singaporeans of all ages. As Mr Seah Kian Peng and Mr Lee Yi Shyan pointed out, technological progress and increasing digitisation are effecting rapid changes globally. Minister Vivian Balakrishnan will provide a progress update and outline new Smart Nation initiatives.

28. We will help our people and our companies make adjustments for the future, and continue to raise the capabilities of our public officers to deliver better public services. And this is what a Caring, Competent and Trusted Public Service has to do – and what many Members such as Dr Fatimah Lateef, Mr Seah Kian Peng, Mr Lee Yi Shyan, Mr Louis Ng, Mr Cedric Foo, Ms Chia Yong Yong and Dr Teo Ho Pin have suggested.

29. We will continue to strengthen our institutions to operate in a more integrated way. The recently passed Public Sector (Governance) Act strengthens our corporate governance and accountability. 

30. Mr Perera asked about our internal framework for reporting wrong-doings, and this is the Internal Disclosure Framework. It is working well. Officers know about it. About 320 cases were reported to the Internal Disclosure Framework in 2017. The number has remained stable over the past three years. Of these, about 9 in 10 were followed up by formal investigations, with 134 resulting in some form of disciplinary action. However, many of these cases did not involve the misuse of public funds and did not reflect serious gaps in the Public Service’s systems of checks and controls. So the system is there, it works well, and our public officers are aware of it. 

31. And, as I have said before, there are also avenues for public officers to report to the Public Service Commission, or to the Head of Civil Service, and our enforcement agencies including the Police and the CPIB. And Mr Perera knows that these are very effective organisations. 

32. On annual reports I completely agree with Mr Perera, we should only print them when we need to and in fact this is the policy that we adopt, and I take your suggestions to heart and we will see how we can reduce publication of physical copies further.

Public Sector Transformation

33. Mr Lee Yi Shyan also cited the intensified competition among Asian economies and asked how we could adopt an innovation culture more widely. The Public Service will continue to help and partner Singaporeans and companies to seize new opportunities. As the various sectors of our Economy are transforming for the future, the Public Service has also embarked on its own transformation to be more innovative, work smarter through technology and deliver better public services for our people. 

34. Minister Ong Ye Kung will speak more on the transformation effort later, but here, I would like to highlight two areas. First, raising the digital capabilities of our Public agencies and; Second, deepening the skills of our Public Service officers. 

(a) Raising the Digital Capabilities of our Public Agencies 

35. Dr Teo Ho Pin, Dr Fatimah and Mr Lee Yi Shyan asked how the Public Service as a whole is upgrading and reinventing itself. All our agencies are working on enhancing their digital capabilities, which will allow them to deliver more integrated services for Singaporeans and businesses. An example is the new HDB Resale Portal. Buyers and sellers of HDB resale flats can now complete the process in half the time – or just eight weeks, since the start of this year. Real estate agents benefit from this too, as they can also free up the time they spend on administrative work, and focus on offering more value-added services to their clients. And of course, members of the public benefit when they are doing resale flat transactions, whether they are buyers or sellers. Senior Minister of State Janil Puthucheary will elaborate on our Digital Government efforts later. 

(b) Deepening the Skills of our Workforce and Strengthening our Capabilities

36. Ms Thanaletchimi and Dr Teo also asked about what the Service will do to prepare our workforce for technological disruption.   Last year I spoke about training 10,000 public officers by 2020 in digital capabilities such as data analytics, and data science for policy formulation, service delivery and corporate services. We are on track. More than 4,000 officers have attended training courses as at the end of 2017. To expand our reach, the Civil Service College will partner Institutes of Higher Learning so that every public officer can deepen their skills, and have access to tools for this digital age. 

37. We also support our officers of all ages to transform, upskill and innovate, so that they are ready to take on new roles, which is also a question that Mr Patrick Tay asked. At IRAS for example, more than 400 staff ambassadors – called LEA:D Advocates – support their peers through change and learning new skills. Several LEA:D Advocates are 55 years and older. They have stepped forward to share with others how they have picked up new digital skills to analyse large volumes of data, and digital applications to automate data entry. 

38. Dr Teo rightly pointed out that ultimately, building a tech-enabled workforce is not an end in itself. It must benefit our citizens through more effective delivery of services. 

39. To maximise the benefits and savings, operating models and business processes must also be re-engineered, and jobs redesigned so that our officers can immediately put their new skills to use. 

Conclusion

40. Mr Chairman, Sir, let me thank Members once again for their strong support for the Public Service.  

41. Let me conclude by assuring this House that we are gearing up as One to ensure that the Government and Public Service is ready to embrace the challenges, and create a better future for our current and future generations.  

42. And with your permission Mr Chairman, Minister Ong Ye Kung will now elaborate on the Public Service’s transformation efforts. 

43. Thank you.