Ministerial pay to be reviewed

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#1
May 22, 2011
Ministerial pay to be reviewed

Special committee will review basis and level of salaries, says PM Lee
By Lydia Lim, Deputy Political Editor

Ministers' salaries will be reviewed - that was the first dramatic change Prime Minister Lee Hsien Loong chose to announce last night after being sworn in for another five-year term.

National Kidney Foundation chairman Gerard Ee will be the head of a committee to review the basis and level of these salaries, PM Lee said in a speech at the Istana, after he and his new Cabinet were sworn in by President S R Nathan.

Mr Lee made clear that while the country would always need committed and capable ministers who should be paid properly, 'politics is not a job or a career promotion. It is a calling to serve the larger good of Singapore'.

He thereby signalled that he and his new team know that unhappiness over high ministerial pay must be addressed if they are to renew the compact between government and people.

Mr Ee told The Sunday Times that a guiding principle of the review that his committee will undertake would be the Prime Minister's point that holding political office is about serving the public.

'PM has said in his speech that salaries must reflect the values and ethos of public service. That means that whatever we work out, the final answer must include a substantial discount on comparable salaries in the private sector and people looking at it will say, 'these people are serving and making a sacrifice',' he said.

He said he expects his committee to do an in-depth study of comparable salaries in the private sector, and to factor in other points of reference, such as general wage levels.

They have been handed a very serious task, he said, as the issue of ministers' pay is very important and has the attention of the electorate.

'We must be seen to be very fair and transparent. We must be able to robustly defend our recommendations,' he said.

Education Minister Heng Swee Keat said he fully supports Mr Lee's decision to review political salaries, 'so that we get an agreement on this important national issue'.

The policy of pegging ministers' salaries to top private sector pay has been in place since 1994 but remains controversial and unpopular.

The current benchmark for ministers' pay is two-thirds of the median income of the top eight earners in six professions, including bankers and lawyers.

The Government does not disclose how much each minister is paid but the most current figures released by the Public Service Division show that the annual salary of an entry-grade minister was $1.57 million in 2009.

The Prime Minister's salary that year was $3.04 million.

During the recent election campaign, opposition politicians attacked ministers' salaries as being far removed from the wages of ordinary Singaporeans. The policy had also failed to achieve its aim of attracting top private sector talent into government, they said.

Yesterday, political observers and economists welcomed the announcement of the review. Former Nominated MP Siew Kum Hong said it showed that there truly 'are no sacred cows'.

Others suggested that ministers' pay be pegged more closely to median rather than top incomes.

In his speech, Mr Lee pledged that his Government would review both its politics and its policies so as to better work with Singaporeans to 'create a just and fair society', a phrase the PAP used at its founding in 1954.

He spoke of renewal in three ways. First, a renewal of leadership to lead Singapore in a new phase of development.

Mr Lee has named a younger team to the Cabinet, and appointed four first-term Members of Parliament to the positions of minister and minister of state.

Second, a renewal in the Government's approach to policies, including a rethink of what is necessary and best for Singapore's future. 'Though Singaporeans trust that our policies are mostly sound, nothing should be sacrosanct,' he said.

The third renewal is of the values at the heart of government and society. Mr Lee pledged to work with Singaporeans to create a society which gives all citizens the best start in life, and leaves no one behind.

'A Singapore which excites our young and respects our old. A society that nurtures and inspires the human spirit, beyond material success,' he said.

lydia@sph.com.sg

------------------------
May 22, 2011
Ministerial salaries: A short history

By Rachel Chang

It has been an albatross around the Government's neck since the policy pegging ministerial pay to the private sector was first implemented in the mid-1990s.

The issue of ministerial pay first surfaced in 1972 and has remained controversial since. In 1985, then Prime Minister Lee Kuan Yew told Parliament that he had been a 'kept man' in all his years in public service.

His pay as PM was much less than what his brother and wife, both lawyers, were earning in private practice, he said. He himself would have earned as much if he had not gone into public service.

But it was only nine years later that the idea of finding a formula to peg ministerial salaries to private sector pay began gathering speed.

In January 1994, then Senior Minister Lee said such a formula would 'remove the need to justify pay revisions every few years as adjustments based on income tax figures could be made automatically each year'.

In October that year, a White Paper on Competitive Salaries for Competent and Honest Government was endorsed by Parliament after an intense three-day debate.

The benchmark at which a junior minister's salary would be set was two-thirds the average principal income of the top four earners in six professions: banking, accountancy, engineering, law, managing local manufacturing companies and managing multinational corporations.

The one-third discount was meant to be a 'visible demonstration of the sacrifice' entailed in becoming a minister.

Passionately imploring Singaporeans to support the benchmark, then Prime Minister Goh Chok Tong told Parliament: 'It will be penny wise and pound foolish if you deny me the means to get the best people in government.'

After the White Paper was endorsed by Parliament, an independent panel set the Prime Minister's pay at twice that of the most junior minister. Mr Goh was to be paid about $1.5 million.

But if Mr Lee had thought a benchmark would negate the necessity of the Government periodically justifying ministerial pay rises, he was disappointed. The benchmark itself threw up a different set of problems.

It was the target of much public confusion and ire, little of which was defused by the Government's continued defence of the policy - such as Mr Lee's 1996 speech to unionists complete with figures from the Inland Revenue Authority of Singapore showing what the top earners in the private sectors made.

Another headache for the Government: the difficulty of keeping ministerial pay pegged to the benchmark.

For example, while top private sector earners saw their incomes rise right through the 1990s, the 1997-1998 Asian financial crisis saw the Public Service Division freeze pay increases in the public sector.

As then Deputy Prime Minister Lee Hsien Loong noted in April 2000: 'Workers' wages fell across the board in 1997 and 1998. At the top, we expected incomes also to fall, after a delay.

'But this did not happen. To our surprise, the civil service benchmarks rose steadily throughout the crisis.'

This was because even during a recession, there would be people in the private sector who would do well. The people whose salaries were reflected in the benchmarks differed from year to year.

Although the benchmarks might call for ministers' salaries to be raised, the political cost of doing so while workers' incomes fell was seen as too heavy. And so ministers often took pay cuts during economic crises.

By 2000, ministerial salaries were at only 70 per cent of the benchmark.

That year, Parliament debated the Government's intention to raise them to 80 per cent, and then to 100 per cent over three years.

The benchmark was also tweaked, in response to criticism that its methodology skewed upwards. It would now be two-thirds of the median income of the top eight earners in six professions, as opposed to two-thirds of the average income of the top four earners previously.

By including a broader sample, it would be more representative. Also, only 50 per cent of the stock options awarded to the top earners would be taken into account in calculating the benchmark , as the options were often outsized.

But the move to have ministerial pay cleave more to the benchmark was quickly stymied again - by the crises following the Sept 11, 2001 attacks on the United States, and the outbreak of Sars in 2003.

With the economy in the doldrums, ministers took pay cuts rather than following the benchmark upwards.

As a result, by 2007, the gap had again grown: Ministerial pay was at only 55 per cent of the benchmark.

The debate that followed over the move to bring pay to 70 per cent of the benchmark was heated and acrimonious.

Workers' Party chairman Sylvia Lim said in Parliament that the average worker's monthly wage would be earned by ministers in two to three hours.

'Does the Cabinet not feel a tinge of discomfort in drawing taxpayers' money at such a rate?' she asked.

Then Minister Mentor Lee Kuan Yew rose to defend the policy, arguing that high salaries had kept the country's governance top-notch and uncorrupt for 50 years.

He painted a picture of what might happen if Singapore had sub-par ministers because it refused to pay for top talent:

'Your apartment will be worth a fraction of what it is. Your jobs will be in peril, your security will be at risk and our women will become maids in other people's countries.'

As a result of the revisions in 2007, Prime Minister Lee Hsien Loong's pay increased from $2.5 million to $3.1 million.

He said he would donate his increase to charity over the next five years.

At the end of last year, ministerial salaries stood at about 70 per cent of the benchmark, after planned increments were deferred due to the 2009 financial crisis.

------------------------

May 22, 2011
NEWS analYSIS
Deciding ministerial pay will be tough

By Chua Mui Hoong, Deputy Review Editor

Major-General (NS) Chan Chun Sing walking off the stage after receiving his letter of appointment from PM Lee and President Nathan yesterday. The ministerial pay review signals the PAP's intent to act on its election promise of change. -- ST PHOTO: DESMOND LIM

When People's Action Party (PAP) leaders started talking about change, promising to listen to people's concerns and review policies, my first reaction was: Would they bite the bullet and review ministerial pay?

I wasn't the only Singaporean who wondered, judging from letters to The Straits Times Forum page and online blogs.

The issue of high pay for ministers has become so contentious that it is like a wound in the body politic.

It did not begin that way. In fact, the idea to have a formula to peg the pay of political office-holders to top corporate chiefs' pay was meant to remove the issue's political sting. Establish a formula, peg ministers' pay to it, and voila - you get a workable method to determine how much ministers should be paid. The aim was to establish a salary level high enough so the very able will not be required to accept a drastic fall in lifestyle as a result of entering politics, but not so high that it becomes an inducement in itself.

That, at least, was the theory.

In the 17 years since the formula has been in place, the result has been the reverse. Ministers' high pay has been criticised and debated extensively in Parliament - but always with the PAP defending the principle, arguing that it was necessary to pay top dollar to attract talent into the political ranks.

And yet, last night, Prime Minister Lee Hsien Loong chose to announce a review of political salaries at the swearing-in of his new Cabinet: 'One important area for review is political salaries. We will always need committed and capable ministers. Politics is not a job or a career promotion. It is a calling to serve the larger good of Singapore. But ministers should also be paid properly in order that Singapore can have honest, competent leadership over the long term.

'I know that Singaporeans have genuine concerns over the present salaries. Hence I am appointing a committee to review the basis and level of political salaries. The committee will be chaired by Mr Gerard Ee, chairman of Changi General Hospital and chairman of NKF (National Kidney Foundation).'

The review is very welcome. Coming after a decisive change in the Cabinet line-up, it signals the PAP's intent to act on its election promise of change.

But the hard work lies ahead. To be credible, the committee must consist of non-partisan, independent-minded people. Mr Ee, a social service veteran and trusted accountant, is a good choice as chair.

It is a cardinal principle that those who stand to benefit should not be involved in setting their own pay. Hence, the other members of the committee should not come from the ranks of political office-holders, or indeed from the civil service.

The committee's terms of reference should also be made clear, both so that it can do its work properly, and also so that Singaporeans' expectations are set right.

It should be wide enough to allow the committee free range to do what it believes is right for Singapore - balancing the need to pay ministers properly, as the PM put it, but not erode their standing in the public eye as public servants who have answered the call of duty to serve their country.

What has changed to induce PM Lee to announce a review of a pay formula that all three of Singapore's Prime Ministers - Mr Lee Kuan Yew, Mr Goh Chok Tong and the incumbent - have so stoutly defended?

We can only speculate, but the following are possible reasons:

First, the formula's failure to fulfil the objective of attracting private sector talent. In the last Cabinet, seven out of 18 ministers sworn in were from the private sector. At last night's swearing-in, only Foreign and Law Minister K. Shanmugam (former litigator) and Defence Minister Ng Eng Hen (former surgeon) among the 14 full ministers are from the private sector. The rest are from the public sector, the military or academia, although a few, like Mr Gan Kim Yong and Mr S. Iswaran, were in private sector jobs before holding political office.

The entry of high-earning, high-flying professionals like Mr Chen Show Mao into opposition politics - without the lure of multi-million-dollar salaries - also discredited the PAP's argument in the public eye.

Second, the depth of resentment over the issue has intensified. Such feelings are impossible to quantify, but any trawl of online forums or coffee shop talk will suggest that high ministerial pay is the No. 1 pet hate of many Singaporeans. To be sure, unhappiness at this policy has been present from the outset, but it has been more recently amplified by social media online.

As many have noted, the issue has become the distorting lens through which many ordinary Singaporeans view the PAP government, and indeed all political matters. It eroded the moral high-ground the PAP occupied as a result of having provided decades of good government and the considerable personal sacrifice of its founders, and introduced a transactional tone into the people-government relationship: We pay top dollar, you deliver or get out.

Third, as some senior government figures have acknowledged privately, the current formula is flawed.

It is counter-cyclical because of the time-lag in getting income data. In a recession, the benchmark may go up as it is based on income from one or two years ago. But raising ministers' pay in a recession would be political suicide. Result: Actual pay given to ministers was typically 50 to 70 per cent of the benchmark for years. This creates a rather absurd effect of the PAP getting flak for very high salaries it deems politically untenable to pay to its ministers.

The formula is also flawed because it is pegged to outliers - the top eight earners in six professions. As many have noted, a windfall pay packet, say, or a once-in-a-lifetime deal, can propel someone into that top spot. But the next year, his pay may plunge.

The minister's pay however, always remains at that level, for it is pegged to the top earners, whoever they might be, every year. It is like striking lottery every year, the critics noted.

The review committee has to decide if a formula is a good way to determine political salaries. If yes, it should relook the current formula, and consider alternatives, such as linking it to median income.

Two things are certain about the committee's recommendations: it will result in lower political salaries. And whatever method it proposes will continue to be controversial.

But if the composition of the committee is right, it will have one strong plus factor: ministerial pay would have been determined by a committee of neutral people who do not benefit from it. That alone would make the entire review worthwhile.

muihoong@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
Wayang again..

They took 9 long years to realise this ?!?!?

If not for the fact that WP scored a GRC and most of the major GRC won by slim majority of less than 60%, PAP will not be scrambling to review this...

Fact is in GE2016, their support from the Aged will fall (as some will have passed on) and the upcoming Gen-Y will swing the votes to opposition... And there is now no way to redraw the GRC boundary as most of them are susceptible to toppling by opposition..

Anyway, let's all sit back and watch how the wayang is played out...

If the bad policies are still not addressed and the fake foreign talent continues to stream in without quality control, it is time to make GE 2016 a TRUE WATERSHED ELECTION...




Reply
#3
Zelphon san....relax and cool...man

Frankly i got nothing against LHL, his old guards were high handed in running the country ...like Jaya, WKS, MBT all these are his seniors not easy to control them...

After GE he attitude completely change towards more pro-citizen.....if he is sincere let see whether he will invite WP MP to sit in the committee...hope he do it.

Let see whether is this time round he really 'wholeheartedly' make changes..in few mths times we will know........
Reply
#4
(22-05-2011, 12:30 PM)koh_52 Wrote: Zelphon san....relax and cool...man

Frankly i got nothing against LHL, his old guards were high handed in running the country ...like Jaya, WKS, MBT all these are his seniors not easy to control them...

After GE he attitude completely change towards more pro-citizen.....if he is sincere let see whether he will invite WP MP to sit in the committee...hope he do it.

Let see whether is this time round he really 'wholeheartedly' make changes..in few mths times we will know........

Well, we all have to just sit back and see...

The foreigner population issue is getting outrageous everyday...

The damage has been done to the housing issue...

Many issues were accumulated from the past decades of bad governance...

One good thing that I realized from this GE is that the young are not apathetic at all...

I had the opportunity to chat with some GEN-Y who happened to turn 21 this year but yet unable to vote....

They clearly saw the need for more opposition in Parliament and the various issues happening around them...

Even now, PAP won only 60% of the votes and yet get 81 seats in Parliament.. This GRC system is so flawed and unfair.. And we get Tin Pei Ling as MP... I heard a rumour that TPL has gotten a triple promotion after GE and promoted to Director in Ernst and Young... Talk about connections and dirty politics...

My choice is very clear in GE 2016 because I believe in fairness and a 1st world parliament with a balance share of power between PAP and the Oppositions...

Meanwhile, I shall endure for 5 yrs and see if PAP can clear up the mess from the past decades of bad governance.

Reply
#5
(22-05-2011, 12:19 PM)Zelphon Wrote: Wayang again..

They took 9 long years to realise this ?!?!?

If not for the fact that WP scored a GRC and most of the major GRC won by slim majority of less than 60%, PAP will not be scrambling to review this...

Fact is in GE2016, their support from the Aged will fall (as some will have passed on) and the upcoming Gen-Y will swing the votes to opposition... And there is now no way to redraw the GRC boundary as most of them are susceptible to toppling by opposition..

Anyway, let's all sit back and watch how the wayang is played out...

If the bad policies are still not addressed and the fake foreign talent continues to stream in without quality control, it is time to make GE 2016 a TRUE WATERSHED ELECTION...

If WP only win one SMC , I think they will continue their pay increase , gst from 7% to ... because they would claim the people gave them another strong mandate to do what they like, just to fufil their happiness.
Hope many appreciate what WP had done for the citizens, if not for WP and other oppo , they just coundn't careless.

Reply
#6
The key words are "civil servants" and "public service".
The ministers had a higher moral duty to the country and this moral duty seems to be diluted as time goes by.
The spirit of the founding fathers was lost and so went the respect we had for the party.
WP struck a chord with the common folks and they indeed intend to serve the country without the lure of monetary gains.

Reply
#7
Business Times - 23 May 2011

Big pay cuts on the cards


PMO calls for 'significant discount' in ministers' pay relative to private sector

By JAMIE LEE

(SINGAPORE) The government has sent its strongest signal yet that a pay cut for the President and the ministers is on the cards: Yesterday, it spelled out the limitations of presidential duties and the need for a 'significant discount' in ministers' pay compared to private sector salaries.

These and other guidelines for the new salary review committee - the other members of which were named yesterday - also call for a relook at the pay structure for Members of Parliament and political appointment holders, according to a media release.

The seven new individuals identified to join National Kidney Foundation chairman Gerard Ee in the committee represent unions, the private and public sectors and charity organisations. They include Stephen Lee, president of Singapore National Employers Federation and chairman of Singapore Airlines; Fang Ai Lian, chairman of the Charity Council and insurer Great Eastern; Venture Corporation CEO Wong Ngit Liong and BreadTalk Group chairman George Quek.

The Prime Minister's Office said in its media release that the committee must review the basis and level of salaries 'for the President, Prime Minister, political appointment holders and Members of Parliament to help ensure honest and competent government'. It must also take into account salaries of comparable jobs in the private sector and other reference points such as general wage levels in Singapore.

'While the salary of the President should reflect the President's high status as the head of state and his critical custodial role as holder of the second key, it should also take into account the fact that unlike the Prime Minister he does not have direct executive responsibilities except as they relate to his custodial role,' the release said. 'The salary of ministers should have a significant discount to comparable private sector salaries to signify the value and ethos of political service.'

The committee will also use ministers' job specifications as a reference, Mr Ee told Channel NewsAsia. No deadline has been set for the recommendation report, but the new salaries will be backdated to May 21, 2011 - the date the new government took office.

Prime Minister Lee Hsien Loong's salary of about $3 million is much higher than that of his Asia-Pacific and global counterparts. A February report by CNN showed that Donald Tsang, Chief Executive of Hong Kong, earns some US$530,000 (about $656,000) a year, Australia's Prime Minister Julia Gillard takes home about US$345,000 annually, and South Korean President Lee Myung Bak - who has already built about US$31 million in personal wealth as the ex-CEO of Hyundai - earns US$137,000 a year, all of which is pledged to the less fortunate.

Ministers here are paid some two-thirds of the median income of the top eight earners in six professions such as bankers and lawyers - a benchmark that some market watchers think should be changed to a peg on median income.

The Singapore Democratic Party had proposed that the PM's pay be 30 times the median income here. The monthly median income of Singaporean residents in full-time employment was $2,710 in June 2010, which means the PM would earn about $976,000 a year on that basis, or about 30 per cent of his current pay.

The UK's senior salaries review body - a nine-person panel that has provided independent advice on salary reviews since 1971 - looks at broad factors that include the government's inflation target, the differences between employment terms of the public and private sectors, the state of the labour market and economy, and staff retention. The review body is made up of economists, businessmen and human relation consultants. Ministerial pay in the UK - which chose to implement drastic austerity measures in the light of its £167 billion (S$336 billion) budget deficit last year - has been slashed in recent months.

British Prime Minister David Cameron has seen his annual pay go down twice in just over a year. His predecessor Gordon Brown ordered last year that the prime minister's remuneration package be cut from £194,000 to £150,000. Soon after, Mr Cameron's personal initiative to take down ministerial salaries by 5 per cent across-the-board left him with £142,500, equivalent to about $285,000.

These salaries exclude certain subsidies, however. For example, Ministers in the House of Lords who have a second home in London get a night subsistence allowance of £33,990 per annum (about $68,000).

Over in the United States, the annual salary of its president was raised to US$400,000 annually in 2001, or doubled from US$200,000. But President Barack Obama's 2010 tax return showed that he earned US$5.5 million, mostly from book sales.

Many former US presidents earn well after they leave the White House. In 2007, The Washington Post cited that Bill Clinton earned nearly US$40 million in speaking fees over six years.

PM Lee said last month that the high fees earned by US politicians through such speaking engagements and book sales did not make a good system, adding then that having the president's pay set so low would mean a low pay ceiling for the rest of the civil service.

The Singapore government does not reveal how much each minister is paid, although it showed that in 2009, an entry-grade minister was paid $1.57 million. Ministerial salaries also have not strictly followed the benchmark, as ministers have taken pay cuts during downturns.

Ministerial salaries last year stood at about 70 per cent of the benchmark, with increments postponed in the light of the financial crisis of 2009.

My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#8
Quote "PM Lee said last month that the high fees earned by US politicians through such speaking engagements and book sales did not make a good system, adding then that having the president's pay set so low would mean a low pay ceiling for the rest of the civil service."

We are obviously paying too much for our minister and high ranking civil servants...

One such civil servant can even take super long extended leave to go learn French Cooking class at Cordon Bleu in France and he boasted about it!!!!

If our minister has the capability to speak well and write well, they can jolly well go speak in seminars and write books and earn money...
At least those money are not dangled freely from taxpayers...

During the GE, how many minister exactly can speak well??

Tin Pei Ling and Teo Ser Luck is a joke !!

PM Lee should stop using senseless reasons to justify their high salary..

Politicians in USA handles major crisis like Tsunami, Earthquake..
Politicians in Japan handles nuclear crisis..
Ours can't even handle a simple flood crisis in orchard road!!!

What other compelling reasons can they use to justify the salary for their sorely limited capability???
THERE ARE NONE !!!

We Singaporeans are no longer daft !!!!

Reply
#9
(22-05-2011, 12:44 PM)Zelphon Wrote:
(22-05-2011, 12:30 PM)koh_52 Wrote: Zelphon san....relax and cool...man

Frankly i got nothing against LHL, his old guards were high handed in running the country ...like Jaya, WKS, MBT all these are his seniors not easy to control them...

After GE he attitude completely change towards more pro-citizen.....if he is sincere let see whether he will invite WP MP to sit in the committee...hope he do it.

Let see whether is this time round he really 'wholeheartedly' make changes..in few mths times we will know........

Well, we all have to just sit back and see...

The foreigner population issue is getting outrageous everyday...

The damage has been done to the housing issue...

Many issues were accumulated from the past decades of bad governance...

One good thing that I realized from this GE is that the young are not apathetic at all...

I had the opportunity to chat with some GEN-Y who happened to turn 21 this year but yet unable to vote....

They clearly saw the need for more opposition in Parliament and the various issues happening around them...

Even now, PAP won only 60% of the votes and yet get 81 seats in Parliament.. This GRC system is so flawed and unfair.. And we get Tin Pei Ling as MP... I heard a rumour that TPL has gotten a triple promotion after GE and promoted to Director in Ernst and Young... Talk about connections and dirty politics...

My choice is very clear in GE 2016 because I believe in fairness and a 1st world parliament with a balance share of power between PAP and the Oppositions...

Meanwhile, I shall endure for 5 yrs and see if PAP can clear up the mess from the past decades of bad governance.

haha, I agree with Koh52. Chill man. Smile

Considering where the country has gotten after 40 odd years of independence, i wouldn't exactly say it was 'decades' of bad governance.

I'm looking forward to seeing what the next five years bring. I personally like PM Lee.
Reply
#10
a) Quote from the news article "...Actual pay given to ministers was typically 50 to 70 per cent of the benchmark for years..." ie ministers have not enjoyed the full benefit from the outrageous amounts computed from the formula. Since the full benefit was not enjoyed, but instead attracted lots of criticism, it is high time a committee is formed to amend the formula. However, I am willing to believe the committee was formed due to more altruistic reasons.

b) During the GE campaign period, the compensation of Capitaland CEO was mentioned as an example of high compensation enjoyed by private sector as compared to ministers. It may be interesting to note that, during the last AGM, the CEO of Capitaland shared with shareholders that there is such thing as negative bonus in his compensation package, for not meeting KPIs. New bonus awarded has to first offset against any negative bonuses. Furthermore, the award of bonus is spread over a few years to discourage decisions that has short term benefit but longer term bad effects.

c) Voters have extremely high expectation of politicians who draw outrageously high income. They are expected to be god and no amount of under-performance will be tolerated. Lowering the salary to a level where there is personal sacrifice may in fact help to retain politicians as voters may be more forgiving of the occasional lapses. This point was mentioned in another way in the 2nd point of the news article. In addition, lowering the salary down from the outrageous levels may restore public perception of public service back to the "holy order" mentioned by the late Dr Goh Keng Swee.
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