There was an article in the Straits Times today, which mentioned the make-up pay for Ministers. Essentially, the Prime Minister has the discretion to pay new Ministers 90% of the difference between his previous private sector pay and the Ministerial pay. (The article said that this has never been used - it was offered to Tony Tan in 1995, but he turned it down.)
The article mentioned that the Review Committee on Ministerial Salaries recommended that this discretion be kept, but be limited to 1 term, rather than the current 2 terms.
The report says:
90 Similarly, we agree with public feedback that the Prime Minister should have the flexibility to offer a higher salary outside of the Ministerial salary ranges to an outstanding candidate from the private sector who may be drawing a significantly higher salary. We therefore propose retaining the current make-up pay system which was introduced in Parliament in 1989 but has not been used so far. Under this system, the Prime Minister can offer a candidate make-up pay for up to 90% of the difference between the pay of the appointment and the candidate’s average pay in the last three years prior to the appointment. However, we propose that this be for up to one term in office only, as compared to the current provision of up to two terms. After this, the person will be paid according to his salary grade.
According to the Straits Times article, this discretion was discussed in Parliament in 1989. The Hansard record shows that Goh Chok Tong (then 1st DPM) and Lee Hsien Loong (then a Minister) were tasked to defend the policy. From the Hansard:
Mr Goh Chok Tong:
Make-up Pay for Ministers
Even with the higher salary grades for Ministers, we will still want from time to time to induct successful and able men from the private sector into the Cabinet, men who are earning far more than the revised pay for Ministers, to serve for one or perhaps two terms. If such a person has first to be tried out for a period as a Minister of State before being appointed a full Minister, the problem becomes more acute.
To accommodate these possibilities without upsetting the protocol order, the Government is introducing a system of make-up pay, similar to that practised with reservist national servicemen.
In future when a Minister or a Minister of State is appointed, he may receive make-up pay in addition to his rank pay. In other words, if he earns more than that of a Minister of State and he is appointed as a Minister of State, the difference will be paid to him by way of a make-up pay, but he will not receive the entire difference. He will receive only up to 90% of that difference. The calculation will be based on his income tax returns for the last two years before his appointment. The make-up pay will not be carried on for ever. A Minister can continue to receive this for up to two terms of office. In other words, after two terms the make-up pay will be removed because after that he either returns to the private sector or continues on his rank pay alone without this make-up pay.
We are introducing this system of make-up pay because I believe this will enable the country to benefit from the services of those who do not wish to make politics their entire career, but who have a contribution to make to the nation. They can now become Ministers without having to make too much of a sacrifice.
The system of make-up pay will not apply to existing office-holders. It will be used primarily to induct successful people between 35 and 45 years of age to be tried out as Ministers of State before they are appointed as Ministers.
The Minister for Trade and Industry and Second Minister for Defence (Services) (BG Lee Hsien Loong):
As for make-up pay, there are circumstances when we will need it. In recent general elections, the only Ministers of State who have come in and received a pay rise are the ex -civil servants or ex-Army officers. Everybody else who has come from the private sector has done so at a pay cut, in some cases, a substantial pay out. All right, we have managed to do it with these few. Do we want to continue doing so?
We have revised the Minister of State's pay somewhat. But we cannot push it all the way up. Neither do we want to appoint such a person to be a Minister straightaway, because a successful executive might not make it as a Minister. So when he comes in as a Minister of State in his mid-30s or early 40s, make-up pay provides one way to bridge the gap and ease the transition.
The other circumstance in which we will need it is when we have a key Minister's post vacant and we must bring in somebody from the very top of the private sector pinnacle. We need a Minister for Finance. We need a Minister for Law. Not any Minister can do the job. You need in one case a lawyer, in the other somebody who is very familiar with the world of finance. And if he is anywhere on this table, how will you persuade him to enter? In fact, if he is not on this table, questions should be asked why we are taking him at all! Why should we, in order to accommodate such a person, correspondingly inflate every other Minister's salary to the same level? Is it necessary? Is it justifiable? We do not think so. Therefore, a system of make up pay is established. Of course, if we bring in a top banker and then leave him as Minister of State for two terms, say in the Ministry of Education or Law, questions might be raised why the Government is doing such a thing. Is he really worth all that money? But I do not foresee this Government acting in such an irrational way.
It's not clear if such a policy is useful or will ever be used now, but it has seldom surfaced in the public arena.
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