Jun 4, 2011
Guardian of the reserves
As potential contenders for the post of Elected President emerge, Insight traces how the institution first came about and its evolution over the years.
By Elgin Toh
IT WAS a Sunday afternoon in April 1984 and then Prime Minister Lee Kuan Yew was hosting a dialogue at the Tanjong Pagar community centre.
One man asked how vulnerable his Central Provident Fund (CPF) savings were to Singapore dollar devaluations.
Mr Lee said it was a question that 'goes right to the bone'.
If the Government acted irresponsibly, he noted, 'your one dollar now may be worth 20 cents by the end of the year'.
Indeed, if the Cabinet were spendthrift and cared only for short-term gain, it could dish out freebies with abandon, squandering reserves that had been prudently accumulated over decades, he added.
'What has been built in 25 years, you can throw away in 25 days of madness,' he warned, with a sobriety that many had come to associate with him.
Then came this revelation: The Government was considering a major constitutional amendment, to put in place a 'blocking mechanism' so that the nation's reserves could be spent only with the approval of the President and a special committee.
The revelation would, seven years later, spawn a brand new institution called the Elected Presidency, under which the people elected a head of state who would have the moral authority to exercise custodial powers over the nation's reserves and top public service appointments.
His job was to guard against a hypothetical rogue government.
The 'special committee' is what we know today as the Council of Presidential Advisors.
In an uncanny historical coincidence, when Mr Lee made the revelation, the minister by his side was Mr Ong Teng Cheong, who would go on to become Singapore's first popularly elected president.
In the 27 years since, two men have served three terms as Elected President: Mr Ong from 1993-99, and Mr SR Nathan from 1999. Mr Nathan's second term ends on Sept 1.
Yet, by many accounts, this institution has not become entrenched.
It is a work in progress.
Indeed, almost 20 years after its inception, one clause under the original set of proposed amendments has not come into effect - that requiring a national referendum for amendments to the President's powers.
This is so precisely because the Government feels all the parties involved need more time to familiarise themselves with this still-evolving institution.
But most agree that progress has been made.
This, after all, is a uniquely Singapore institution, never before tried elsewhere.
Singapore's head of state, as Mr Lee noted in 1993 after the first presidential election, is 'somewhere in between' the fully executive model, like the American President, and the purely ceremonial model, like Canada's Governor General.
In beating its own path to a mature and workable parliamentary system, Singapore may need many more years of experimentation.
elgintoh@sph.com.sg
The Elected Presidency through the years
1984
FOUR months after Mr Lee Kuan Yew's initial disclosure that a constitutional amendment to protect national reserves was in the offing, he shed more light on the subject in his National Day rally speech.
For the President to have the moral authority to thwart an elected Prime Minister, he too should be elected by the people, not by Parliament, as had been the case since Independence, Mr Lee said.
He added that the Elected President should preferably be a former minister, familiar with the workings of government.
Meanwhile, in Parliament, opposition MP J.B. Jeyaretnam pressed Mr Lee for a referendum on the proposal.
Mr Lee said: 'We cross our bridges when we come to them. First a White Paper, then a proper debate and then a referendum, and many other things besides.
'All procedures and processes necessary for such an entrenched clause will be dutifully and faithfully followed.'
1988
THE first White Paper on the proposed changes was presented to Parliament in July, ahead of that year's general election, with the view of making the amendments an issue during the hustings.
In the 11-page document, the Government laid out its case.
The 'untrammelled power' that the existing Constitution extended to the government of the day posed a latent risk to Singapore's future.
'Any government, even a temporary coalition which comes into power by a majority of only one seat in Parliament, has complete legal access to all the levers of power and decision-making,' it warned. 'Overnight, everything can be dismantled.'
In particular, it pointed to two precious assets that warranted special protection:
More than $30 billion in national reserves, which was vital to a country with no natural resources; and
A meritocratic and impartial civil service that was nevertheless vulnerable to nepotistic appointments if a bad government were to come into power.
Having considered alternatives, including the creation of an upper legislative house and a body resembling the United States Federal Reserve Board, the Government decided that a President with expanded powers would be most effective.
Under the proposed 'two-key safeguard mechanism', the President held a second key and his concurrence was required for any likely drawing of reserves and appointments to key public offices.
Stringent eligibility criteria would be imposed on prospective candidates.
They had to have held appointments 'of sufficient importance and responsibility', examples of which include Cabinet minister, Speaker of Parliament, Chief Justice, permanent secretary and top private sector posts.
The Government could overcome a presidential block in two ways, the paper suggested.
One, it could wait for the next presidential election and call on the electorate to vote in another President agreeable to the blocked initiative.
Two, it could amend the Constitution with a two-thirds majority to curtail the President's power. Under the proposed changes, this amendment would have to be confirmed by the electorate in a referendum, also with a two-thirds majority.
But the referendum clause, known as Article 5 (2A) of the Constitution, has not kicked into effect till this day because the Government maintains that more experience under the new framework needs to be chalked up before allowing presidential powers to become entrenched.
During the parliamentary debate and subsequent election campaign, opposition politicians and a number of PAP backbenchers were critical of the proposed Elected Presidency.
Retired minister Ong Pang Boon expressed 'grave reservations', warning that 'another centre of power will emerge around the President' and that the power of future Prime Ministers would 'correspondingly be reduced'.
Opposition candidates also decried the eligibility criteria, claiming that only PAP candidates were likely to qualify.
The Government defended its proposals in Parliament and in three televised debates during the election campaign.
1990
HAVING taken into account various suggestions and criticisms, the Government proceeded to present its second White Paper to Parliament.
It contained two significant changes.
It gave the President additional safeguard powers on ministerial orders under the Internal Security Act and the Maintenance of Religious Harmony Act. It also gave him power to authorise investigations by the Corrupt Practices Investigation Bureau even if the Prime Minister refused to grant consent.
The other change however, curtailed his powers. It allowed Parliament to override a presidential veto on the use of reserves or key public service appointments with a two-thirds majority if the President's call contradicted the advice of the Council of Presidential Advisors (CPA).
The President may nominate only two members to this six-member panel. Of the other four, two are nominated by the Prime Minister, one by the Chief Justice and one by the chairman of the Public Service Commission.
The actual amendment Bill was tabled in Parliament and debated. A 12-member Select Committee, which included opposition MP Chiam See Tong, was convened and considered 34 written representations from members of the public.
It amended the Bill based on submissions. For example, it accepted a suggestion by law lecturer Walter Woon - who later became Attorney-General - that presidential candidates should be required to resign from all political parties.
The Select Committee's report said it accepted this so the President would not only be above party politics, but 'be manifestly seen to be so'.
1991
THE Constitution was successfully amended by 75 votes to one, with the sole dissenting vote coming from Mr Chiam.
No referendum was called. Then Prime Minister Goh Chok Tong said he saw the resounding election victory in 1988 as a sign that there was no public desire for one, since the Elected Presidency had been a salient issue during the campaign.
Sitting President Wee Kim Wee automatically assumed the new role, without having to be popularly elected.
1993
MR WEE'S term ended, paving the way for the first presidential election.
Deputy Prime Minister Ong Teng Cheong was first off the mark, announcing his candidacy before quitting his party and government posts. The labour chief was backed by both the PAP and the National Trades Union Congress.
Nominated MP Chia Shi Teck said he would throw his hat into the ring if nobody else stepped forward, to ensure a contest.
But that was not necessary, as the PAP subsequently engineered a contest. Retired deputy prime minister Goh Keng Swee and then Finance Minister Richard Hu persuaded former accountant-general Chua Kim Yeow to stand.
Initially reluctant, Mr Chua gradually warmed up to the race. In his second TV broadcast, he labelled Mr Ong as a PAP man: 'The PAP dominates the government and dominates the legislature. Do you want the PAP to dominate the presidency as well?'
Mr Ong won with 58.7 per cent of votes.
1994
FURTHER constitutional amendments were passed, requiring the President to publish in the Government Gazette his rationale for agreeing or disagreeing with a government decision to draw on past reserves.
The changes also removed the President's veto rights over security and defence spending funded by reserves. The Government argued that since the Prime Minister and Cabinet were empowered to decide whether the country would go to war, they must also be allowed to execute that decision.
1995
THE first of two public disagreements surfaced between President Ong and the Government.
The President questioned the Government's right to amend Article 22H of the Constitution without his consent.
The Article, which the Government claimed had been wrongly drafted, stated that if a President blocks Parliament when it tries to amend certain laws, his veto is final if the courts rule that the amendment would curtail his powers.
President Ong referred the matter to a Supreme Court tribunal, which ruled in favour of the Government. He later said he would be failing in his duty if he had simply let the matter pass.
1999
AS HIS term of office wound to a close, President Ong gathered the press at the Istana in July to announce that he would not stand for re-election.
He also revealed that his relationship with the Government during his six-year term had at times been uneasy.
Among his complaints were that when he asked the Government to provide the detailed values of all reserves in the form of physical assets, such as land, he was told the information would take 56 man-years to produce. He then scaled back on his request and asked for a plain listing of these physical asset reserves instead.
One month after his revelations, Finance Minister Richard Hu gave a point-by-point clarification in Parliament, stressing that the difficulties that arose were 'honest differences in views'.
PM Goh added that at no time did the Government withhold information from the President.
In response to the public debate over the role of the presidency triggered by President Ong's disclosures, Mr Goh also clarified that the President had no executive powers, only custodial ones.
'Only the Government exercises executive powers,' he said.
Earlier, Senior Minister Lee Kuan Yew also reminded Singaporeans that 'there can be only one centre of government in the country'.
In the light of the disagreements, President Ong and the Government agreed upon a convention by which the President will protect reserves. This was then presented to Parliament in the form of a White Paper, which defined the reserves and set out clear procedures on presidential oversight. It included a requirement that the Government and key agencies provide the President with regular financial updates. The White Paper sets out guidelines and is not legally binding.
The PAP backed veteran diplomat SR Nathan for the post. Mr Nathan was elected unopposed after private tutor Ooi Boon Ewe and opposition politician Tan Soo Phuan failed to secure certificates of eligibility.
2001
PARLIAMENT passed a constitutional amendment locking away as past reserves at least half of the net investment income earned from past reserves. This was previously treated as current reserves, which did not fall under presidential purview.
2005
PRESIDENT Nathan completed his first term and announced he would seek re-election.
This time, the former chief financial officer of statutory board JTC Corporation, Mr Andrew Kuan, joined the race.
The three-member Presidential Elections Committee, which vets candidates, turned him down, after finding his experience not comparable to that laid out under the Constitution.
2008
CUSTODIAL powers of the President are exercised for the first time, as the Government issued a $150 billion guarantee on all bank deposits here in the wake of a global financial crisis. The Government said that the chances of actually having to make a payout were low, but that they had to be backed by actual reserves to be credible. President Nathan approved the move.
Another constitutional amendment was passed the same year. The net investment income framework was replaced with the net investment returns framework. Capital gains were included in the definition of returns. And long-term expected real returns were used as opposed to present returns. This increased the income available for use in annual budgets.
The President's powers were revised accordingly: The Government had to seek the President's concurrence on its projected rate of return for the next 20 years, failing which an average historical real rate of return would be used instead.
2009
A DEEP economic crisis prompted the Government to draw on past reserves for the first time since the creation of the Elected Presidency.
The turning of the second key went ahead smoothly, as President Nathan approved the use of $4.9 billion for two schemes - one to save jobs and another to ease credit for companies.
It took 11 days for the President and the CPA to go over the Government's plan before granting approval. Said President Nathan: 'I think the system was tested. It responded to the urgency.'
2011
A PRESIDENTIAL election is due by August - this time with the General Election fresh on voters' minds. Former PAP backbencher Tan Cheng Bock has announced that he will be running as an independent candidate, not backed by the PAP.
The PAP has not confirmed whom it is endorsing, although former foreign minister George Yeo has said he is 'thinking hard' about running.
ELGIN TOH
Guardian of the reserves
As potential contenders for the post of Elected President emerge, Insight traces how the institution first came about and its evolution over the years.
By Elgin Toh
IT WAS a Sunday afternoon in April 1984 and then Prime Minister Lee Kuan Yew was hosting a dialogue at the Tanjong Pagar community centre.
One man asked how vulnerable his Central Provident Fund (CPF) savings were to Singapore dollar devaluations.
Mr Lee said it was a question that 'goes right to the bone'.
If the Government acted irresponsibly, he noted, 'your one dollar now may be worth 20 cents by the end of the year'.
Indeed, if the Cabinet were spendthrift and cared only for short-term gain, it could dish out freebies with abandon, squandering reserves that had been prudently accumulated over decades, he added.
'What has been built in 25 years, you can throw away in 25 days of madness,' he warned, with a sobriety that many had come to associate with him.
Then came this revelation: The Government was considering a major constitutional amendment, to put in place a 'blocking mechanism' so that the nation's reserves could be spent only with the approval of the President and a special committee.
The revelation would, seven years later, spawn a brand new institution called the Elected Presidency, under which the people elected a head of state who would have the moral authority to exercise custodial powers over the nation's reserves and top public service appointments.
His job was to guard against a hypothetical rogue government.
The 'special committee' is what we know today as the Council of Presidential Advisors.
In an uncanny historical coincidence, when Mr Lee made the revelation, the minister by his side was Mr Ong Teng Cheong, who would go on to become Singapore's first popularly elected president.
In the 27 years since, two men have served three terms as Elected President: Mr Ong from 1993-99, and Mr SR Nathan from 1999. Mr Nathan's second term ends on Sept 1.
Yet, by many accounts, this institution has not become entrenched.
It is a work in progress.
Indeed, almost 20 years after its inception, one clause under the original set of proposed amendments has not come into effect - that requiring a national referendum for amendments to the President's powers.
This is so precisely because the Government feels all the parties involved need more time to familiarise themselves with this still-evolving institution.
But most agree that progress has been made.
This, after all, is a uniquely Singapore institution, never before tried elsewhere.
Singapore's head of state, as Mr Lee noted in 1993 after the first presidential election, is 'somewhere in between' the fully executive model, like the American President, and the purely ceremonial model, like Canada's Governor General.
In beating its own path to a mature and workable parliamentary system, Singapore may need many more years of experimentation.
elgintoh@sph.com.sg
The Elected Presidency through the years
1984
FOUR months after Mr Lee Kuan Yew's initial disclosure that a constitutional amendment to protect national reserves was in the offing, he shed more light on the subject in his National Day rally speech.
For the President to have the moral authority to thwart an elected Prime Minister, he too should be elected by the people, not by Parliament, as had been the case since Independence, Mr Lee said.
He added that the Elected President should preferably be a former minister, familiar with the workings of government.
Meanwhile, in Parliament, opposition MP J.B. Jeyaretnam pressed Mr Lee for a referendum on the proposal.
Mr Lee said: 'We cross our bridges when we come to them. First a White Paper, then a proper debate and then a referendum, and many other things besides.
'All procedures and processes necessary for such an entrenched clause will be dutifully and faithfully followed.'
1988
THE first White Paper on the proposed changes was presented to Parliament in July, ahead of that year's general election, with the view of making the amendments an issue during the hustings.
In the 11-page document, the Government laid out its case.
The 'untrammelled power' that the existing Constitution extended to the government of the day posed a latent risk to Singapore's future.
'Any government, even a temporary coalition which comes into power by a majority of only one seat in Parliament, has complete legal access to all the levers of power and decision-making,' it warned. 'Overnight, everything can be dismantled.'
In particular, it pointed to two precious assets that warranted special protection:
More than $30 billion in national reserves, which was vital to a country with no natural resources; and
A meritocratic and impartial civil service that was nevertheless vulnerable to nepotistic appointments if a bad government were to come into power.
Having considered alternatives, including the creation of an upper legislative house and a body resembling the United States Federal Reserve Board, the Government decided that a President with expanded powers would be most effective.
Under the proposed 'two-key safeguard mechanism', the President held a second key and his concurrence was required for any likely drawing of reserves and appointments to key public offices.
Stringent eligibility criteria would be imposed on prospective candidates.
They had to have held appointments 'of sufficient importance and responsibility', examples of which include Cabinet minister, Speaker of Parliament, Chief Justice, permanent secretary and top private sector posts.
The Government could overcome a presidential block in two ways, the paper suggested.
One, it could wait for the next presidential election and call on the electorate to vote in another President agreeable to the blocked initiative.
Two, it could amend the Constitution with a two-thirds majority to curtail the President's power. Under the proposed changes, this amendment would have to be confirmed by the electorate in a referendum, also with a two-thirds majority.
But the referendum clause, known as Article 5 (2A) of the Constitution, has not kicked into effect till this day because the Government maintains that more experience under the new framework needs to be chalked up before allowing presidential powers to become entrenched.
During the parliamentary debate and subsequent election campaign, opposition politicians and a number of PAP backbenchers were critical of the proposed Elected Presidency.
Retired minister Ong Pang Boon expressed 'grave reservations', warning that 'another centre of power will emerge around the President' and that the power of future Prime Ministers would 'correspondingly be reduced'.
Opposition candidates also decried the eligibility criteria, claiming that only PAP candidates were likely to qualify.
The Government defended its proposals in Parliament and in three televised debates during the election campaign.
1990
HAVING taken into account various suggestions and criticisms, the Government proceeded to present its second White Paper to Parliament.
It contained two significant changes.
It gave the President additional safeguard powers on ministerial orders under the Internal Security Act and the Maintenance of Religious Harmony Act. It also gave him power to authorise investigations by the Corrupt Practices Investigation Bureau even if the Prime Minister refused to grant consent.
The other change however, curtailed his powers. It allowed Parliament to override a presidential veto on the use of reserves or key public service appointments with a two-thirds majority if the President's call contradicted the advice of the Council of Presidential Advisors (CPA).
The President may nominate only two members to this six-member panel. Of the other four, two are nominated by the Prime Minister, one by the Chief Justice and one by the chairman of the Public Service Commission.
The actual amendment Bill was tabled in Parliament and debated. A 12-member Select Committee, which included opposition MP Chiam See Tong, was convened and considered 34 written representations from members of the public.
It amended the Bill based on submissions. For example, it accepted a suggestion by law lecturer Walter Woon - who later became Attorney-General - that presidential candidates should be required to resign from all political parties.
The Select Committee's report said it accepted this so the President would not only be above party politics, but 'be manifestly seen to be so'.
1991
THE Constitution was successfully amended by 75 votes to one, with the sole dissenting vote coming from Mr Chiam.
No referendum was called. Then Prime Minister Goh Chok Tong said he saw the resounding election victory in 1988 as a sign that there was no public desire for one, since the Elected Presidency had been a salient issue during the campaign.
Sitting President Wee Kim Wee automatically assumed the new role, without having to be popularly elected.
1993
MR WEE'S term ended, paving the way for the first presidential election.
Deputy Prime Minister Ong Teng Cheong was first off the mark, announcing his candidacy before quitting his party and government posts. The labour chief was backed by both the PAP and the National Trades Union Congress.
Nominated MP Chia Shi Teck said he would throw his hat into the ring if nobody else stepped forward, to ensure a contest.
But that was not necessary, as the PAP subsequently engineered a contest. Retired deputy prime minister Goh Keng Swee and then Finance Minister Richard Hu persuaded former accountant-general Chua Kim Yeow to stand.
Initially reluctant, Mr Chua gradually warmed up to the race. In his second TV broadcast, he labelled Mr Ong as a PAP man: 'The PAP dominates the government and dominates the legislature. Do you want the PAP to dominate the presidency as well?'
Mr Ong won with 58.7 per cent of votes.
1994
FURTHER constitutional amendments were passed, requiring the President to publish in the Government Gazette his rationale for agreeing or disagreeing with a government decision to draw on past reserves.
The changes also removed the President's veto rights over security and defence spending funded by reserves. The Government argued that since the Prime Minister and Cabinet were empowered to decide whether the country would go to war, they must also be allowed to execute that decision.
1995
THE first of two public disagreements surfaced between President Ong and the Government.
The President questioned the Government's right to amend Article 22H of the Constitution without his consent.
The Article, which the Government claimed had been wrongly drafted, stated that if a President blocks Parliament when it tries to amend certain laws, his veto is final if the courts rule that the amendment would curtail his powers.
President Ong referred the matter to a Supreme Court tribunal, which ruled in favour of the Government. He later said he would be failing in his duty if he had simply let the matter pass.
1999
AS HIS term of office wound to a close, President Ong gathered the press at the Istana in July to announce that he would not stand for re-election.
He also revealed that his relationship with the Government during his six-year term had at times been uneasy.
Among his complaints were that when he asked the Government to provide the detailed values of all reserves in the form of physical assets, such as land, he was told the information would take 56 man-years to produce. He then scaled back on his request and asked for a plain listing of these physical asset reserves instead.
One month after his revelations, Finance Minister Richard Hu gave a point-by-point clarification in Parliament, stressing that the difficulties that arose were 'honest differences in views'.
PM Goh added that at no time did the Government withhold information from the President.
In response to the public debate over the role of the presidency triggered by President Ong's disclosures, Mr Goh also clarified that the President had no executive powers, only custodial ones.
'Only the Government exercises executive powers,' he said.
Earlier, Senior Minister Lee Kuan Yew also reminded Singaporeans that 'there can be only one centre of government in the country'.
In the light of the disagreements, President Ong and the Government agreed upon a convention by which the President will protect reserves. This was then presented to Parliament in the form of a White Paper, which defined the reserves and set out clear procedures on presidential oversight. It included a requirement that the Government and key agencies provide the President with regular financial updates. The White Paper sets out guidelines and is not legally binding.
The PAP backed veteran diplomat SR Nathan for the post. Mr Nathan was elected unopposed after private tutor Ooi Boon Ewe and opposition politician Tan Soo Phuan failed to secure certificates of eligibility.
2001
PARLIAMENT passed a constitutional amendment locking away as past reserves at least half of the net investment income earned from past reserves. This was previously treated as current reserves, which did not fall under presidential purview.
2005
PRESIDENT Nathan completed his first term and announced he would seek re-election.
This time, the former chief financial officer of statutory board JTC Corporation, Mr Andrew Kuan, joined the race.
The three-member Presidential Elections Committee, which vets candidates, turned him down, after finding his experience not comparable to that laid out under the Constitution.
2008
CUSTODIAL powers of the President are exercised for the first time, as the Government issued a $150 billion guarantee on all bank deposits here in the wake of a global financial crisis. The Government said that the chances of actually having to make a payout were low, but that they had to be backed by actual reserves to be credible. President Nathan approved the move.
Another constitutional amendment was passed the same year. The net investment income framework was replaced with the net investment returns framework. Capital gains were included in the definition of returns. And long-term expected real returns were used as opposed to present returns. This increased the income available for use in annual budgets.
The President's powers were revised accordingly: The Government had to seek the President's concurrence on its projected rate of return for the next 20 years, failing which an average historical real rate of return would be used instead.
2009
A DEEP economic crisis prompted the Government to draw on past reserves for the first time since the creation of the Elected Presidency.
The turning of the second key went ahead smoothly, as President Nathan approved the use of $4.9 billion for two schemes - one to save jobs and another to ease credit for companies.
It took 11 days for the President and the CPA to go over the Government's plan before granting approval. Said President Nathan: 'I think the system was tested. It responded to the urgency.'
2011
A PRESIDENTIAL election is due by August - this time with the General Election fresh on voters' minds. Former PAP backbencher Tan Cheng Bock has announced that he will be running as an independent candidate, not backed by the PAP.
The PAP has not confirmed whom it is endorsing, although former foreign minister George Yeo has said he is 'thinking hard' about running.
ELGIN TOH
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