<![CDATA[Singapore leaders take pay cut as coronavirus batters global economy]>
Singapore's government ministers will take a one-month cut in their salaries that can cross a million dollars a year, in an unprecedented move by the trade-reliant economy as it reels from the impact of the coronavirus outbreak that has upended supply chains and battered financial markets.
Members of Parliament will also take a one-month pay cut to their allowances, while senior public service officers will have a half-month reduction in their salaries.
President Halimah Yacob also volunteered to have her pay cut by a month, Deputy Prime Minister Heng Swee Keat said in Parliament on Friday, as he wrapped up a debate on the budget he presented last week.
Commuters seen wearing masks on a train in Singapore on February 18, 2020. Photo: Reuters alt=Commuters seen wearing masks on a train in Singapore on February 18, 2020. Photo: Reuters
A 2012 White Paper on government salaries recommended that entry-level ministers earn S$1.1 million (US$786,600) a year, with bonuses making up about 35 per cent of the package. This means a one-month salary reduction would reduce their annual package by about 5.4 per cent.
The prime minister earns twice as much, at S$2.2 million, although this does not include a performance bonus, then-Deputy Prime Minister Teo Chee Hean told Parliament in 2018. Members of Parliament get an allowance that averages around S$16,000 a month.
"The political leadership will do our part to show solidarity with fellow Singaporeans," Heng said, adding that the government had been able to act swiftly against the spread of the virus because it had the "strong trust" of citizens.
"In the weeks and months to come, we will need to draw deeply on Singapore's reserves of resilience trust and solidarity. This unity of purpose across our whole society is what will see us through these challenging times."
Heng also announced that public officers at the front line of efforts to tackle the outbreak would get a special bonus of up to one month.
Travellers walk past a temperature screening check point at Changi Airport on February 27, 2020. Photo: AFP alt=Travellers walk past a temperature screening check point at Changi Airport on February 27, 2020. Photo: AFP
The novel coronavirus, which causes the Covid-19 disease, has infected more than 83,000 and killed more than 2,800. Singapore has 96 confirmed cases, but 66 people have recovered.
Heng, who is also the finance minister, last week announced financial measures worth S$6.4 billion to help the economy cope with the impact of the coronavirus outbreak. They consist of an S$800-million health care package, S$4 billion for businesses and workers, and another S$1.6 billion for households to tide them over the crisis, setting the country on the path for its biggest budget deficit since at least 1997 when the Asian Financial Crisis hit.
Heng also postponed a hike in the goods and services tax from 7 to 9 per cent, leading analysts to say that the budget sweeteners suggested an election " that needs to be held by April 2021 " would take place this year. Indeed, before the coronavirus outbreak, there was talk the election could be held as early as the first half of the year.
Singapore's planned GST hike has been postponed. Photo: Bloomberg alt=Singapore's planned GST hike has been postponed. Photo: Bloomberg
Ministerial pay has been a contentious issue in Singapore and has come up in previous election campaigns.
Founding Prime Minister Lee Kuan Yew had defended Singapore's high ministerial salaries by saying that government leaders did not get hidden perks like in other countries and their wages helped keep the administration corruption-free.
During an announcement of a pay rise of ministers, Lee's successor Goh Chok Tong, who ran Singapore from 1990 to 2004, once said in Parliament: "If we do not pay ministers adequately, we will get inadequate ministers. If you pay peanuts, you will get monkeys for your ministers. The people will suffer, not the monkeys."
During the 1997 Asian Financial Crisis, Singapore froze its ministers' pay, while their salaries were cut twice from 2001 to 2006 " once after the September 11 attacks in 2001 and then in June 2003, after the outbreak of the severe acute respiratory syndrome (Sars). Their pay checks were restored in 2004 and 2005.
Singaporeans have been impacted economically amid the coronavirus outbreak. Photo: AFP alt=Singaporeans have been impacted economically amid the coronavirus outbreak. Photo: AFP
Eugene Tan, a law don at the Singapore Management University, said the move to cut the salaries of ministers and MPs was the first of its kind.
"It is a signal by the political leaders that they are with the people as Singapore and Singaporeans face severe economic headwinds generated by the Covid-19 outbreak," Tan said. "It is an attempt at a show of unity as everyone is tightening their belts. We may see more public and private organisations follow the lead."
Bilveer Singh, who lectures in political science at the National University of Singapore, said because the outbreak was handled "well", voters would likely be impressed with the ruling party's move to dock their own pay.
Meanwhile, Heng on Friday also elaborated on the delayed GST hike.
He described the eventual tax hike as an "appropriate and responsible way" for the government to meet national needs, such as building up health care facilities and developing affordable school services, and that the government's approach was to "tax lightly".
"The big shift in public expenditure in the next decade will be in health care spending. It will grow significantly as the population ages," said Heng.
He added that Singapore's health care expenditure was 0.7 per cent of its GDP in 2000, but that figure had tripled to 2.1 per cent in 2015.
With an ageing population, Singapore's health care expenditure is expected to rise, the finance minister said. Photo: AFP alt=With an ageing population, Singapore's health care expenditure is expected to rise, the finance minister said. Photo: AFP
As the number of elderly citizens continues to rise, Heng expected public health care spending to grow by about 1 per cent of GDP over the next 15 years.
"The outbreak reminds us why we need to plan ahead to raise avenues. We must ensure that we have enough resources to meet our people's needs," Heng said. "Planning ahead entails being honest with ourselves and with citizens, and having the discipline to raise revenues in a timely manner."
Heng said even after the GST was raised to 9 per cent, the increase in revenue of about 0.7 per cent of GDP would still be lower than the expected annual increases in health care spending. A 9 per cent GST would also still be lower than the average rate in Asia, he added.
The finance minister had earlier said that despite a larger-than-usual budget, the government was using its surplus and did not tap on its reserves.
But Heng said on Friday that should the coronavirus outbreak worsen, Singapore was ready to take that step.
The Lion City last withdrew S$4.9 billion from its reserves in 2009 to deal with the global financial crisis.
"It was the ... spirit of prudence that allowed us to have enough surplus this term to provide the fiscal support for our economy and our people," Heng said. "But if the situation deteriorates significantly and calls for us to tap on our past reserves, I will make a case to the President to seek her approval."
For the 2019 financial year, Singapore's Net Investment Returns Contribution (NIRC) " the city state's projected returns from investments using its reserves " was the largest single contributor to the budget at S$17 billion, or 3.3 per cent of GDP, Heng said.
He said this was "highly unusual" as most developed nations pay about 2 per cent of their GDP to service accumulated debt.
"In other words, in most advanced countries, citizens today pay for the spending of the past generations," he said. "In Singapore, it is the reverse."
This article originally appeared on the South China Morning Post (SCMP).
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