Winning back public trust after GE

An excellent article by Ngiam Tong Dow.
My views about the ministerial salary and the transparency of the reserves are similar to Ngiam Tong Dow. I am glad that he highlighted these two points as being the most important for building the trust of the public.

Winning Back Public Trust after GE

By NGIAM TONG Dow

FOR THE STRAITS TIMES

THE General Election on May 7 this year yielded the best possi­ble outcome for Singapore. The People's Action Party (PAP) Government was re­turned to power with an 81-6 majority although its vote share dipped to 60.1 per cent, reflecting a secular decline. The Workers' Party (WP) won Aijunied, a Group Representation Constituency.

The greatest value of the WP win in Aljunied is that it breached a psychologi­cal barrier, giving a boost to the opposi­tion and its supporters. Politics is about winning the hearts and minds of the peo­ple. Trust is the cornerstone. This elec­tion shows some chipping away of the trust that past generations of Singapore­ans had in the PAP. This was shown, for example, in the way Aijunied voters did not heed the statements from senior PAP leaders warning them against choosing the opposition. The challenge for Prime Minister Lee Hsien Loong and his col­leagues is to win back their trust.

The PAP began as a multiracial grass­roots party. Its largely English-educated leadership was supported by the ordinary man in the street, clerks, postmen, techni­cians, small businessmen, carpenters and barbers. Mr Lee Kuan Yew and his Cabi­net colleagues were seen by the electorate as selfless men, sacrificing promising ca­reers for an uncertain future in politics. PAP cadres rode bicycles to hang up elec­tion posters on lamp-posts. The party could not even pay for a soft drink. Former MP Chan Chee Seng told me that they paid out of their own pockets.

The founding generation lived frugal lives. My permanent secretary drew a monthly salary of $1,95O, just three times more than mine, a young rookie, at $680.

When the gap between the highest and the lowest paid is excessive, the rank and file become disgruntled. Insolence sets in. Morale goes down. The organisation, whether Government, business, or profes­sional practice, begins its slow decline.

The Government has done most things right. Over the five decades since inde­pendence in 1965, Singapore's per capita income has increased from $500 to $50,000. Unemployment rates have fall­en from over 10 per cent to 3 per cent. The Housing Board has resettled and re­housed 85 per cent of the population. Average education levels have been raised from primary to tertiary levels in one gen­eration.

Yet the Government's popular vote has dropped to 60.1 per cent, close to the psychological tipping point of 60 per cent. I feel that this decline is due in part to the Government's own policies. Some Singaporeans believe less and less that the Government acts in their best inter­est. In the earlier years Mr. Lee Kuan Yew's rallying cry was that no one owes Singapore a living. Despite its hard edge, the older generation believed that then PM Lee Kuan Yew and his Government put Singaporeans first.

Not having gone through the hard times of the earlier years, the young gen­eration today is not willing to give the Government the benefit of the doubt. They judge the Government by its actions, not just promises.

Changes in two aspects of PAP policies can help build more trust: ministerial sala­ry, and being more open about national re­serves.

The formula used for benchmarking ministerial salaries to top earners in the private sector is perceived as a case of heads you win, tails we lose. Worse, it is regarded as self-serving.

A better benchmark would be the medi­an income at the 50th percentile. If we can agree that the core role of govern­ment is to raise the livelihoods of the peo­ple, then the median income is a good measure of the Government's perform­ance. As a minister's job is more complex than that of the average wage earner, his compensation can be 10, 15, 20 or 25 times the average. Ministerial salaries can range from $40,000 to $100,000 a month or somewhere in between. This would be about $480,000 to $1.2 million annually.

The Government should adopt a clean wage system and not use incentive schemes modelled on the private sector. Profit may be the measure of perform­ance in a company, but not in a public ad­ministration. Using gross domestic product (GDP) as a proxy for performance of the Government and using this as one in­dicator to determine bonuses for minis­ters is deeply flawed. For instance, the GDP of Singapore can expand simply by importing more low-cost foreign workers - but this would be detrimental to citi­zens' interests. It is good that a commit­tee has been set up to review salaries of ministers and political office-holders.

To my mind, even more crucial than revising ministerial salaries, is the need for transparency in the management of Singa­pore's national savings.

These are accumulated from Central Provident Fund contributions, budget sur­pluses, revenue from land sales and divi­dends from government-linked compa­nies such as DBS, Singapore Airlines (SIA), SingTel, ST Engineering, Keppel and Sembcorp. These enterprises were es­tablished with equity from the Ministry of Finance or the Ministry of Defence.

Temasek Holdings and the Govern­ment of Singapore Investment Corpora­tion (GIC) are the wealth managers for the Singapore Government. Temasek Holdings was established by the Ministry of Finance to manage the equity invest­ments of the Government, such as SIA, Neptune Orient Lines, DBS and other gov­ernment-linked companies. Though Temasek was expected to play an entrepre­neurial role like its predecessor, the Eco­nomic Development Board, it has become more and more of an equity investment manager no different from private hedge funds. In fact, it has sold off some know­ledge-based government -linked compa­nies.

Temasek and GIC are profiled in the fi­nancial press as Singapore's sovereign funds. They are not. They are just wealth managers for the Ministry of Finance. The ministry is the custodian of Singa­pore's national wealth. The President ex­ercises custodial powers only over draw- down of past reserves.

There is considerable misunderstand­ing over the governance of Singapore's re­serves. Few people understand just what the reserves are composed of and which agency is responsible for which portion of the funds. To be sure, Termasek Holdings and GIC do publish annual statements on their funds, even disclosing returns. But these are neither comprehensive nor spe­cific.

The Singapore Government can seek to build more trust with citizens by being more open about the size and composi­tion of the national reserves.

While there is no outcry on the secrecy now, a more open, transparent approach can reduce confusion and dispel any doubts on the issue. I would urge the Min­ister of Finance to consider publishing an annual audited statement on the size and composition of our reserves. It can be presented as a White Paper to the new Parlia­ment, which is due to begin its term.

The writer is a former permanent secretary for finance in Singapore. This article is based on a lecture delivered on Tuesday at the Nanyang Centre for Public Administration at Nanyang Technological University.