My Speeches

Government Spending Relative to GDP

Posted on Nov 24, 2009

November 24, 2009

The Speaker: The hon. Member for Battle River-Wainwright,
followed by the hon. Member for Calgary-Varsity.

Government Spending Relative to GDP

Mr. Griffiths: Thank you, Mr. Speaker. I have always believed
there has to be some formal way to measure when a government is
spending too little money, not that that happens very much around
the world, and measure when government spending is too high,
which can seriously unbalance the economy. Some studies indicate
that government spending should fall within a specific range of
GDP, some suggestions are between 20 and 30 per cent being fine,
others suggest a broader range of 15 to 35 per cent, and still others
are very specific at 20 or 22 or 27 per cent. My questions are for the
President of the Treasury Board. Given that numerous studies have
been done to show healthy percentage ranges of GDP that government
spending can and should represent, has the president considered
what size or range of GDP this government’s spending should
be?

Mr. Snelgrove: That’s an interesting question. The GDP is
certainly one of the fiscal tools that we watch as a government, as
business watches as to how it can reflect a healthy economy or
investment in the economy. As a provincial government we have
continually ranked just by any measure well within the guidelines of
healthy spending of GDP. The hon. member makes a very good
point. But to measure the amount of GDP from government
spending, also one needs to encourage: is it borrowed money that the
government is spending? Is it money from outside sources? For
example, Alberta receives a negative amount from the federal
government. So to compare provincially on the same equation
would be very difficult with a province like Quebec, for example,
that receives so much external money and borrows so much money
to operate.

The Speaker: The hon. member.

Mr. Griffiths: Thank you, Mr. Speaker. Many people of my age,
my generation and younger, have approached me from all across this
province with a concern. It’s interesting they’re not overly concerned
about this downturn in the economy or how we’re handling
the situation, but they are concerned about the next round of
surpluses, and quite frankly some of them have said that they’re
terrified that without proper planning new surpluses could raise
expectations, could lead to new program spending increases, which
could mean we aren’t prepared for the next downturn. To the
President of the Treasury Board: given that I and those of my
generation also deeply understand the cyclical nature of our
economy and that the global economy, too, has cyclical downturns,
what is the minister doing to ensure that we properly prepare not for
this time, not for this downturn, but for the next cycle of up and
down?

The Speaker: Well, okay. Hon. minister, speculation is not part of
the question period.

Mr. Snelgrove: I’m glad he’s on our side.
Mr. Speaker, what we’re doing besides controlling government
spending is simply understanding that the most important thing we
can invest in is people. In people that’s knowledge; it’s the research
that comes with knowledge. An educated economy is the solution
to growing a bigger pie. We have control over our spending in here.
We don’t have control over the external forces that drive our
commodity prices up and down. We are blessed to have a variety of
commodities to deal with, but by building more of the new commodities
– the information commodity, the finance commodity – we’ll
be able to diversify and expand our economy because I agree with
him: we don’t want to do this again.

The Speaker: The hon. member.

Mr. Griffiths: Thank you, Mr. Speaker. My final question to the
President of the Board: will the president consider some legislative
parameters that would corral and guide government spending and
savings decisions without being so binding as to remove the ability
of leaders to make important and timely decisions on critical and
emerging issues?

Mr. Snelgrove: Well, Mr. Speaker, we’ve had a discussion about
where the appropriate levels of spending are set, and I’m a firm
believer in the democratic processofbuilding budgets that Albertans
support, believe in, and need. As we face the changing times that
we’re in, it’s very difficult to all of a sudden see something so clear
and open that our revenues will be stable, our expenditures will be
stable, and the rest of our provincial partners will also be in an area
that we can go forward together. I believe you need the political will
that comes from internal and not from a legislated source.