Quality of leadership makes a decisive difference for Singapore

In December last year, the Government appointed an independent committee to review the political salary framework. We are releasing the report today. At the same time, we are setting out the Government’s response. 

It is important that Members and Singaporeans see the two together. The committee has reviewed the framework and made its recommendations. But how those recommendations are implemented is a judgment for the Government to make and take responsibility for. So rather than release the report on its own and leave people to speculate about what it means in practice, we are setting out our response at the same time.

The salary framework itself is not new. It was debated extensively in this House in 2012. Members are familiar with how it works. The committee has affirmed that the framework remains sound, while updating its parameters and recommending some refinements. The Government accepts the committee’s recommendations. But we do not intend to move immediately to the proposed salary levels in one step.

Political salaries are a difficult and emotive issue. The sums involved are more than what most citizens earn. So I understand why Singaporeans scrutinise them closely, and why many feel strongly about the issue. It is certainly not an issue ministers themselves find easy to discuss.

But we run an open system and believe in being transparent about ministerial salaries. We cannot avoid this issue simply because it is politically difficult. This is not just a matter of pay. It is about whether Singapore will continue to have the quality of political leadership we need to take our country forward and to serve Singaporeans well in the years ahead.

Our context

In the last debate in 2012, there was considerable convergence between the People’s Action Party and the Workers’ Party. The WP proposed a different formula from ours. But the resulting salary levels were broadly in the same range. 

More importantly, both sides of the House agreed on the following underlying principles: That political salaries should be transparent with no hidden perks and privileges. That they should be competitive enough to enable us to recruit people of the necessary calibre, while incorporating a substantial discount to reflect the ethos of public service. 

Since then, the Government has repeatedly exercised restraint in making any salary adjustments under the framework. In 2017, the independent review committee recommended an upward adjustment. The Government decided not to proceed. A further review was scheduled for 2023, but this was deferred. As a result, the salary norms for political office-holders have remained unchanged for 15 years. Over the same period, salaries elsewhere have moved. Private sector pay has risen. Civil service salaries have been adjusted. Judicial salaries have been updated.

Ministerial salaries have therefore fallen further behind. The gap is most obvious when compared with the private sector. But even in the public service, some senior permanent secretaries earn more than ministers. It’s not because the framework changed. But because successive governments have decided, at different points, to hold back.

And at each point, there were good reasons for doing so. Senior Minister Lee Hsien Loong had in fact hoped to settle this issue before he stepped down as prime minister. He told me that he would have preferred not to leave a difficult issue like this to his successor. But the circumstances then did not allow him to make an adjustment. So the responsibility now falls to me.

It would have been easier politically for me to leave things as they are. But that would not be the right thing to do. We cannot affirm a framework in principle but disregard it indefinitely in practice. Otherwise, over time, the framework loses its meaning. Restraint cannot become neglect. And that is why I have decided we must act now.

Why political leadership matters

Our starting point is this: good government depends on good leadership. Institutions are only as effective as the people who lead them. Systems and processes matter. But they do not run themselves. Especially at the top, the quality of leadership makes a decisive difference.

Companies understand this very well. That is why boards spend so much time on succession planning. They know that people at the top determine the quality of decisions, the calibre of their team, and ultimately what the organisation can achieve.

I learnt this myself in the public service, how important it is to have the best person at the top. I was chief executive of the Energy Market Authority (EMA) when the Government took over the LNG project. So the task of building the liquefied natural gas (LNG) terminal fell to EMA. No one in EMA had experience doing this. So I searched widely for the best person to lead the project. I eventually found someone. To bring him on board, I had to offer him a competitive package – far more than what I was earning as chief executive of EMA. Human resources were concerned about whether we should pay him so much, but I decided to proceed, and he proved his worth. He built up the LNG team from scratch, and delivered the LNG terminal safely – on time and within budget.

Some may say that ministers are different. Singapore already has a first-rate civil service. Surely capable civil servants can keep the system running. I spent many years in the civil service, and I am very proud of our civil servants. They analyse the issues, develop options and give ministers their best professional advice. And once decisions are made, they work hard to implement them well.

But there are decisions that civil servants cannot and should not make. For example, how fast should we restructure an industry if jobs may be lost in the process? How should the costs of stronger social safety nets be shared among individuals, the community and the Government? How much should we tax today, and how much should we leave for future generations? These are not technical questions. They involve choices about priorities, interests and values.

A strong civil service is no substitute for effective political leadership. Ministers have to set the direction for their ministries, decide the priorities, and make the strategic calls. If those calls are wrong, even the best civil servants will struggle to deliver good outcomes. They may execute efficiently – but they will be executing in the wrong direction.

Over time, the quality of political leadership also affects the quality of the civil service itself. Capable officers want to work for leaders they respect and can learn from. They want ministers who understand the issues, ask the right questions, make sound judgments and take responsibility for decisions.

If ministers consistently fall short, good officers will become frustrated. Many will leave. Some may stay on, but they will be less willing to contribute their best ideas, or take on the toughest assignments. So the idea that we can have less capable ministers sitting above a first-rate civil service, and everything will somehow continue to work, is a fantasy.

Older Members will remember watching the British sitcom Yes Minister, where the civil servants always seem smarter than the minister. But even that is a benign version of the story: At least capable people remain in the system. The more serious risk is that weak political leadership eventually weakens the civil service too. And this is not a theoretical risk. We have seen it happen elsewhere. Countries once known for highly capable governments have seen their civil services deteriorate when political leadership at the top weakened.

What are we looking for in a minister? First, character. That is a veto factor. If someone does not have the integrity, values and commitment to serve, then however capable he or she may be, that person should not be a minister. 

But character alone is not enough. Ministers also need competence – the judgment, ability and leadership to do the job well.  And this is where remuneration becomes relevant. It does not determine who is capable. But it does affect whether enough capable people are prepared to step forward and take on the responsibility.

The job itself is demanding. Some may think it is straightforward – ministers can just go along with the popular view. Indeed, there will always be politically convenient options. We can postpone a difficult reform. We can promise more benefits without being clear about who will pay for them. We can avoid decisions that upset particular groups. All that may be easier in the short term. But eventually the consequences catch up with us.

We see this happen in many countries. Government leaders often know what needs to be done. But the political cost is immediate, while the benefits may come only years later. So difficult decisions are deferred, sometimes repeatedly. In the end, citizens bear a much higher cost. 

Singapore has less room than most countries to govern this way. We are tiny. We have few natural advantages. We cannot afford to let major problems fester for years before acting. Take the reset of our family policies which I announced at the National Day Rally. Civil servants can review each scheme and propose improvements. But it was Indranee Rajah and the other political office-holders in the workgroup who looked at the parenthood journey as a whole, and helped shape the overall package – deciding where support would make the greatest difference, how the costs should be shared between parents, employers and the Government, and how the different measures should fit together.

And we can afford to do this now only because of decisions taken over many years. Successive governments have been careful about how we spend, and disciplined about husbanding our resources. That meant making difficult decisions – including raising the GST when we knew our spending needs would rise. Because we acted earlier, we have the fiscal space today to provide stronger support for families in a sustainable way.

Housing is another example. Over the years, there have been repeated pressures to slow down or postpone the building of more flats. At one time, it was because of weak market conditions and falling property prices. On other occasions, it was because of difficult site constraints. But successive national development ministers, including Desmond Lee and now Chee Hong Tat, have kept up the supply because Singaporeans will continue to need homes. When Covid-19 caused a major shortfall, they worked hard to ramp construction back up and recover lost ground. That sustained effort is why we are now in a stronger position to make further moves on housing.

These examples illustrate what the job of a minister requires. It’s not simply to do what is popular today. It is to make judgments about what will leave Singapore in a stronger position tomorrow. That requires mastery of the issues, a clear sense of priorities, and the willingness to take difficult decisions.

We are fortunate to have ministers who have demonstrated these qualities in different ways. In the climate change arena, Grace Fu had co-chaired difficult negotiations on global carbon markets, and helped countries reach a final consensus. Masagos Zulkifli recently took part in the St Gallen Symposium. A member of the UK House of Lords wrote afterwards to commend his contribution, describing him as a “brilliant ambassador for Singapore”.

I am not suggesting that ministers will always get every decision right. Ministers do make mistakes. Some will be stronger in certain areas than others. And when we fall short, we have to learn, improve and be accountable. But taken as a whole, I believe we have a strong team – as Singapore has had over successive generations. Our ministers are able to master their briefs, exercise judgment, hold their own, and earn the confidence and trust of Singaporeans. And where necessary, represent Singapore credibly on the international stage.

People who can do all these things are not easy to find. They must have the character to serve. They must have the competence to carry the responsibility. And enough of them must be willing to step forward. That is why building and renewing a strong political team takes sustained effort – and why we must ensure that our system continues to give future prime ministers the best possible chance of assembling such a team for Singapore.

Our Singapore system

This challenge is not unique to Singapore. SM Lee once shared with me his conversation with a visiting prime minister. This foreign leader had met some of our ministers and told SM how impressed he was with their quality. He told SM that his greatest challenge as PM was finding people of the right calibre to appoint to his Cabinet. He himself had come from the private sector. So he knew the quality of people available outside politics, and how difficult it was to persuade the right people to step forward. His experience illustrates the basic tension every political system has to manage. Politics must remain a calling to serve our fellow citizens. But if the personal and financial sacrifices become too large, many capable people will simply choose to do something else.

Different countries have tried to manage this tension in different ways. Because political salaries are highly sensitive, many systems keep the official salary low, but have other substantial benefits and privileges accumulate around the office. In some other countries, politicians may supplement their incomes through outside interests. Or more often, the larger financial rewards may come after they leave office. So the headline salary may look modest. But the overall picture is much more complicated.

Yet even with these arrangements, many countries still struggle to attract the people they need. Most countries have much larger populations, and far larger pools of talent to draw from. Yet they still struggle to form strong and stable governments.

Singapore has been an exception. We consistently rank among the leading countries in the world for government effectiveness, integrity and the quality of our public institutions. I meet many people around the world who study governments and public policy. Again and again, they point to Singapore as a model of effective government, and an inspiration for others. We have sustained these standards for so long that they can start to feel normal to Singaporeans. But they are not normal elsewhere – and they are not guaranteed here either.

We did not build this record of good government because Singaporeans are inherently better, or because good government somehow comes naturally to us. We achieved it through deliberate choices made over many decades about how our political system should work. One of those choices was to deal with political remuneration openly.

We recognise that highly capable people have alternatives outside politics. So we pay political office-holders salaries that are competitive, but with a substantial discount to reflect political service. The full remuneration is transparent. There are no hidden salary components or perks outside the published framework. This is what we mean by a clean wage.

In return, Singaporeans rightly expect a great deal from their political leaders. High standards of integrity and conduct. Competence. Responsibility for the decisions we make. And ultimately, accountability to voters at the ballot box. The same broad consideration applies to Members of Parliament.

We chose not to treat the MPs’ allowance as a token allowance. It is a substantial allowance, because MPs carry substantial responsibilities in Parliament and in their constituencies. Providing a proper allowance has enabled both the PAP and WP to recruit and field strong candidates. And we can see the result in this House. We have MPs with a wide range of backgrounds and experience, who bring different perspectives to our debates. We may disagree strongly across the aisle, but the quality of debate is high, and Singapore is better for it.

If we want our political system to remain effective, we cannot allow its basic terms of service to drift further and further away from reality. That applies to MPs’ allowances. It applies even more importantly to political office-holder salaries. Because political renewal is not a one-off exercise. We have to keep bringing in capable Singaporeans from different backgrounds, election after election. Enough of them must be prepared to step forward, contest elections, and take responsibility for the future of our country.

Building our next generation of leadership

That has always been an important philosophy at the heart of the PAP’s approach to government: We must build not only for today, but for the next generation. That was perhaps founding prime minister Lee Kuan Yew’s greatest legacy. He did not just build a successful government around himself. He worked hard to leave behind a system that could keep Singapore going after he was gone.

Central to that was leadership renewal – continually bringing in good people and preparing the next generation to take over. Founding PM Lee himself had exceptional colleagues like Goh Keng Swee and S. Rajaratnam. But he also brought in people from the private sector – like Lim Kim San and later Hon Sui Sen.

In fact, when ministerial salaries were first raised in 1970, Lee explained in Parliament that one reason was to enable him to appoint Hon Sui Sen, then head of the Development Bank of Singapore, as finance minister. He said that to attract capable people to serve as ministers, Singapore cannot “rely on people who are willing to make inordinate sacrifices, particularly when it is at the expense of their families”.

That approach continued into the next generation, with key ministers like Goh Chok Tong, Tony Tan, Ong Teng Cheong and S. Dhanabalan. They were all from the private sector. Over time, however, it became harder to bring people with substantial private sector experience into Cabinet.

It was not for lack of trying. I’ve worked with SM Lee for many years – since 2004, first as a civil servant, and later in Cabinet. I saw first-hand how much time and effort he devoted to identifying people, persuading them to enter politics and building up the next team. That was one reason I agreed to enter politics when he approached me in 2011. Now it is my responsibility as prime minister – not just to lead the present Cabinet, but to build the team that will come after us. I was 51 when I took over as PM – about the same age as SM Lee when he became PM.

From the outside, the transition may have looked smooth. But those of us who went through it know that the path was anything but straightforward. In fact, SM Lee had hoped to hand over earlier. But there were unexpected turns. Heng Swee Keat suffered a stroke. Covid-19 intervened. Heng later decided to step aside. The team had to regroup and work through succession again.

That experience taught me something important. Leadership succession cannot be planned like clockwork. People and circumstances change. Unexpected events happen. So we need strength across the team, and we need to begin renewal early. When I took over, I was very conscious that the renewal task was pressing. I was then one of the youngest members of the Cabinet. Several of our most experienced ministers were advancing in age. But we didn’t have enough younger ministers ready to take over their portfolios. This was despite SM Lee’s sustained efforts to renew the team. And the reduction in political salaries in 2012, followed by 15 years without adjustment, did not make the task any easier.

That’s why leadership renewal became one of my highest priorities. Ahead of the last general election, I approached several senior permanent secretaries who I thought had the temperament and potential for political leadership. With their experience, they could potentially take on major portfolios more quickly. In the end, none was prepared to make the move. But I was able to bring in younger officers with strong potential and a longer runway ahead of them – like Jeffrey Siow, David Neo and Jasmin Lau.

Even so, there is still much more to do. Aside from SM Lee, the three most senior members of my team are Gan Kim Yong, K. Shanmugam and Vivian Balakrishnan. They helm key ministries – the Ministry of Trade and Industry, the Ministry of Home Affairs and the Ministry of Foreign Affairs. By the next term of government, all three will be 70 and above. We should not plan on the basis that they will continue helming these ministries then. For the good of the team, and for the strength of our institutions, we need the next generation to take over. All three understand this, and have in fact been pressing me to put succession plans in place. But they are not so easy to replace.

Gan brings experience across both the private and public sectors. And he commands the confidence of investors and international partners. Shanmugam has decades of experience in law and government – and an unusual ability to get to the heart of complex issues, weigh competing considerations and frame the choices clearly. Few ministers have that combination of judgment and experience at the same level. Vivian has been foreign minister for more than a decade and has built up deep knowledge of the issues and an extensive network of relationships. That experience matters greatly, especially as the external environment becomes more complicated.

It is very hard to find complete ready-made replacements for ministers at this level. A senior person would have a shorter learning curve. But the judgment, experience, political authority and relationships needed for these roles still take time to build. So we need to bring good people in early enough, give them progressively heavier responsibilities, and prepare them to take over. We are doing that now. But we also need depth in the pipeline, because not everyone we bring in will necessarily grow into these roles.

I face the same issue in finding a successor at the Ministry of Finance. I was fortunate to have spent many years there as a civil servant. So I am familiar with the work. That made it easier for me to take over from Heng when he stepped down. For now, I can continue to double-hat as PM and finance minister. But ideally, I should have someone else take over the Finance portfolio. So when I look at the ministries of Finance, Trade and Industry, Home Affairs and Foreign Affairs, the succession challenge is very real.

Recruiting from the public service is becoming harder. Senior civil servants today have meaningful careers, substantial responsibilities and competitive remuneration. Political service would mean giving up that career path, and taking on electoral and public scrutiny. If the gap between public service and political salaries continues to widen, that hurdle will become higher.

If this is already a challenge in the public service, it is greater still in the private sector. That matters, because we cannot build our political leadership from the public service alone. I want people in Cabinet who have spent substantial parts of their careers in business or other professional fields – especially in running large organisations and overseeing complex systems.

They may not start with the same familiarity with government. But they bring experience of making hard decisions, managing people and resources, operating under commercial pressure, and delivering results in a competitive environment. These are valuable capabilities to have in the Cabinet.

Tan See Leng is a good example. He joined us in 2020, after a long career in the private sector. At the last Parliament sitting, he spoke with authority about the challenges entrepreneurs face and what more we can do to support them. He did so with conviction, drawing on years of experience running businesses and dealing with these pressures first-hand. So that gave his speech a conviction that would have been difficult for others in the team to replicate. He brings a different perspective and has made a real contribution to the team.

I would like to bring in more people like him. Ideally, some should come in while they are in their 40s, so they have the runway to learn, grow and take on larger responsibilities over time. Just consider the profile of such people in the private sector. The CEOs of major listed Singapore companies – in banking, telecommunications, aviation, engineering and other sectors – as well as people on track for such leadership roles. At those levels, remuneration can run into several million dollars a year – well above even the revised MR4 benchmark.

We are not trying to match what they earn. We never will. But when we approach people of that calibre, we cannot pretend that the opportunity cost does not exist. Before the last general election, I also spoke to several CEOs and other senior business leaders who I thought could make a real contribution. They were earning several times a minister’s salary. None said to me directly that pay was the reason they would not join. Nor would I want someone whose decision turned mainly on money.

But that does not mean remuneration is irrelevant. Look at the decision from their point of view. They have spent years building a successful career. We are asking them to walk away from that. To take a substantial reduction in income. To contest an election with no certainty of success, and to start again in a completely different environment. In the end, none of those I approached was prepared to make the move. But I have not given up. I am still looking and I hope to persuade a few to join us the next election.

I recognise that the sacrifice is not only financial. Political life places real demands on our families. There is time we do not get back. There is scrutiny that spouses and children did not ask for, but nevertheless have to bear with us. No salary adjustment can make up for these things. Nor was it ever meant to. The purpose of remuneration is much more modest: to ensure that, on top of all these other sacrifices, we do not make the financial hurdle unnecessarily high.

I know too that people look at the team they may be joining – what it stands for, how its members lead and carry themselves, and whether these are people they want to serve alongside. That is a responsibility I take seriously too. Those of us already in political leadership must conduct ourselves in a way that earns respect, inspires confidence and makes good people want to join us.

But even if we do all these things well, I am under no illusion – attracting capable Singaporeans into politics will not become easier. It’s a challenge I face today. And future prime ministers may find it harder still. 

That is the issue we have to confront in this debate. It’s not simply about what we pay ministers today. It’s about whether future prime ministers will continue to have a realistic chance of persuading capable Singaporeans – from the public service, the private sector and other walks of life – to step forward and build a first-rate team to serve Singapore and Singaporeans.

Our response

That brings me to the Government’s response to the committee’s recommendations. Based on the latest data, the committee has recommended updating the MR4 benchmark from $1.1 million to $1.8 million. It has also recommended changes to the other political office-holder salaries and to MP allowances.

The Government accepts these recommendations. The revised framework will take effect from Oct 15. The monthly allowances for MPs will increase from $13,750 to $18,500 from that date. The adjustments to the salaries of President, Speaker and Deputy Speaker will also take effect from then.

The prime minister’s salary is set at twice the MR4 benchmark. I have decided that, for the next five years – assuming I remain PM – I will donate the full increase in my salary arising from this adjustment. The Government will continue to pay me the salary provided for under the framework, which is how our system works. I will then donate the increase to suitable good causes.

This is my own decision. I do not expect other office-holders to do the same. As a general rule, I do not believe in making a public show of charitable giving. But although the salary framework is a Cabinet decision, as prime minister, I carry ultimate responsibility for it. So I want to be clear about how I will personally handle the increase, and why I am taking these changes forward, because I believe they are in Singapore’s interest.

At the end of the five years, I will review the position afresh, taking into account the circumstances at that time. I fully expect to continue supporting good causes, as I have always done. But I do not want to make an open-ended public commitment, or to create an expectation that future prime ministers may feel obliged to follow.

That deals with the salaries and allowances of the President, PM, Speaker, Deputy Speaker and MPs. For ministers and other office-holders, however, the implementation will be different. We will not move immediately to the new salary benchmarks. Instead, we will make a one-off adjustment now of up to 9 per cent for political office-holders. I say “up to” because the same increase will not automatically apply to everyone. The adjustment for each office-holder will depend on individual circumstances, including performance and when his or her salary was last adjusted. 

To illustrate, for an MR4 minister earning the current reference salary of $1.1 million, the full 9 per cent adjustment would bring the salary to about $1.2 million. Thereafter, there will be no further special adjustments to close the gap to $1.8 million. Instead, any subsequent changes will be based on individual performance and responsibilities.

Let me explain how this works. Today there are four ministerial grades – MR4, 3, 2 and 1. For each grade, there is a range of salary points, which determine the minister’s fixed pay. As PM, I decide the grade of each minister; where each minister is positioned within the salary range for that grade; and the individual performance bonus each year.

At present, 10 out of 16 ministers are at MR4. The other six are at higher grades, reflecting their seniority and heavier responsibilities, including those serving as coordinating ministers. Within each grade, ministers can move to different salary points over time, based on performance. I would place a new office-holder at the lower end of the salary range. Those who perform well may move to a higher point within the range, and of course, those who do very well may be promoted to a higher grade as they take on greater responsibilities.

There are also variable components which make up more than one-third of a minister’s annual remuneration. The National Bonus applies to all office-holders, based on the outcomes specified in the framework. The individual performance bonus depends on my assessment of each office-holder’s performance. Last year, for example, individual performance bonuses for political office-holders ranged from three to six months.

So when we refer to the current MR4 reference salary of $1.1 million, this is an all-in reference figure. It includes fixed pay together with assumed levels of performance and bonus payouts. The actual remuneration received by an individual minister in any year can therefore be higher or lower than the reference salary, depending on his or her salary point and the variable payouts.

This is how the system operates today. The committee has recommended some fine-tuning to the current structure. They have recommended that the MR2 and MR3 grades will be combined. So there will be three ministerial grades instead of four. 

They also recommended that the salary range for each grade be widened to plus or minus 25 per cent. We agree with these changes. But the basic approach to assessing and differentiating individual salaries will remain the same. After the one-off special adjustment, I will continue to assess ministers and adjust their salaries in the usual way, based on performance.

On that basis, by the end of this term of government, I expect most ministers who remain at MR4 to be at the lower end of the new salary range and that’s about $1.35 million. Those who excel and take on larger responsibilities may move higher within the range, or be promoted to a higher ministerial grade. 

In other words, ministers’ salaries will be set within the ranges under the revised framework. But exactly where each person is positioned will depend on performance and responsibilities. The revised MR4 benchmark of $1.8 million is not a target salary that every minister must eventually reach. Ministers can be paid above or below the benchmark, within the prescribed range.

The same approach will apply to the other office-holders – ministers of state, parliamentary secretaries and mayors. For these office-holders, I will typically consult their supervising ministers on their performance. But the final decision on their salary points, grades and bonuses rests with me. New office-holders appointed in the next term will likewise come in at different points within those ranges, taking into account their experience and previous remuneration. So over time, we should expect a wider spread in salaries than we have today.

That is the purpose of the revised structure. It gives the PM more room to differentiate pay according to performance, and importantly, to bring in people with substantial experience from outside government, especially those already earning significantly more in the private sector. We will still expect them to make a meaningful sacrifice to enter political service. But we should not make that gap larger than it needs to be. Overall, I believe this will give me and future prime ministers a better chance of persuading capable Singaporeans to step forward, and of building the strongest possible team for Singapore.

Good government

Good government did not come naturally to Singapore. It was built deliberately over many years. And there is nothing automatic about sustaining it. For more than 60 years, Singaporeans have benefited from a government that is able to plan ahead, take difficult decisions and deliver. Our responsibility is to preserve that capacity for those who come after us.

This is not about the PAP Government of today. We cannot predict what the political landscape will look like years from now. But whichever party is in government, Singapore will need strong and effective political leadership to serve our people and take our country forward.

Good leadership has always been important. It will be even more crucial as we navigate a more uncertain and troubled world. So let us make the right decision – to keep the path open for capable and public-spirited Singaporeans to step forward, lead and serve. Let us give our children and future generations the confidence that, when the time comes, there will be leaders ready to rise to the challenge and take Singapore forward.