Monday, 2 December 2013
Can politicians honestly live on low salaries?
Recently, there has been much debate about the salary increments for the Selangor Mentri Besar, speaker, state executive councillors and assemblymen.
Most agree that some salary increment is necessary. After all, the current salaries are incredibly low. You cannot expect your elected representatives to be honest and dedicated if they are not even earning enough to survive and provide for their families with a decent livelihood.
But there are many who argue over the large quantum of the salary increase. Worse, some even suggest elected representatives should do “national duty” and be paid pittance to serve the people.
Thus, the question really boils down to what is the “right” salary. We have already noted that despite a doubling of the Selangor Mentri Besar’s salary to RM30,000 a month, or RM360,000 per year, he would still earn far less than a CEO of a listed company, who typically earns RM1 million to RM5 million annually, many even over RM10 million.
Let us take the example of a federal cabinet minister, who officially earns about RM15,000 a month – or RM14,907 to be exact. The cost of living for members of parliament and state assemblymen are harder to simplify due to the varying size of constituencies and where they live.
The attached table shows that despite living a frugal and simple life – like many squeezed middle income urbanites today -- they will still be grossly out of pocket.
A cabinet minister earning RM15,000 per month will receive about RM12,311 net of taxes.
On the expenses side, we have included a simple frugal lifestyle centred around a family with a house wife and two school going children, a Toyota Camry family car costing RM150,000 (for the wife and family to use, apart from the official car for the minister) and a suburban home costing RM900,000.
Much of the monthly expenses will go towards servicing loans for the home and car, both assumed to be taken with about 85% margin of financing. Monthly instalments for the two will cost RM7,425. Other major monthly expenses include food (RM4,500), education (RM4,000) and maid (RM1,200).
Using these assumptions, there is a monthly deficit of RM10,067, or RM120,806 per year.
Obviously, the table is neither comprehensive nor completely accurate for a minister. But I believe it represents a conservative picture of a typical urban middle class family faced with the rising cost of living and asset prices.
As senior politicians with responsibilities for running the country, surely the ministers – by extension all elected representatives -- deserve to be presentable. They must have a clear mind to do what they are entrusted to do. They must be financially comfortable, such that they can enjoy a comfortable, albeit frugal lifestyle totally funded from their salaries, and not from other sources.
Some argue that we could opt for rich politicians who do not need to be paid. One example cited by a local newspaper was Michael Bloomberg, the mayor of New York, who is reportedly entitled to a US$225,000 annual salary but waives it for a token US$1.
There are a few major holes in this argument.
Firstly, don't we want the best person to serve the country, including those who are not wealthy? To attract those who are not already wealthy, we must pay a salary sufficient for their livelihood, even if they want to sacrifice for the good of society.
Secondly, in certain countries where the rich are elected to positions, like Bloomberg in New York, he will never be able to benefit personally from the position.
Are we ready for the same? Will we have a way to make sure that tycoons who become ministers and PM's do not abuse their positions to promote their own business interests?
Are not the business elites already too powerful, making decisions as king makers, often at the expense of the public?
If so, then what we need are honest, dedicated and capable people to become our elected representatives, to serve the people and the country. And in order to do so, surely, we must provide them a decent livelihood for their families.
So, let us be realistic and bipartisan, and not be hypocritical or delusionary.
We should not set government salaries so unrealistically low that the honest cannot even survive and therefore do not see a future in serving the people.