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BUS106 The Role of Government in Business- from UNDERSTANDING CANADIAN BUSINESS, 7th Cdn Edition

BUS106 The Role of Government in Business- from UNDERSTANDING CANADIAN BUSINESS, 7th Cdn Edition
(custom publication for Seneca) ; - published by McGraw-Hill

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    Bus106 wk3 ch3 role of government in business Bus106 wk3 ch3 role of government in business Presentation Transcript

    • Week 3Chapter 3 – The Role of Government in Business
    • Learning Objectives
    • Historical Role of Government in the Economy
      Canada has a mixed economy; our various levels of governments play a very large role in our economy.
      From the start in 1867 the national policy was to force trade to flow east–west
      Tariffs were used to deter the natural north–south flow of goods.
      Image source: http://commons.wikimedia.org
    • Historical Role of Government in the Economy
      A railroad was built with government assistance to achieve national unity!
      Image source: http://commons.wikimedia.org
    • Government activities that affect business may be divided into six categories:
    • Crown Corporations - companies that are owned by the federal or provincial governments.
      Provided services that were not being provided by businesses (Air Canada in the 1930s)
      Crown corporations were created to bail out a major industry in trouble (Canadian National Railway in 1919)
      Provided some special services that could not otherwise be made available (Bank of Canada)
      Image source: http://upload.wikimedia.org
    • Figure 3.2: A brief list of the top Crown corporations in Canada
      Source: “Largest Crown Corporations,” Financial Post Business, 2 June 2009, p. 82. Material reprinted with the express permission of The National Post Company.
    • Privatization - the process of selling publicly-owned corporations.
      Since the 1990s, federal and provincial governments have embarked upon a series of measures designed to reduce the role of government in the economy.
      Over the years, former large corporations like Teleglobe Canada, Air Canada, and Canadian National Railway (CNR) were sold.
    • Laws and Regulations
      Laws and regulations are created by the politicians who have been elected by Canadians.
      Consequently, the political parties in power can greatly affect the business environment.
    • Laws are derived from four sources:
      provincial and federal statutes (laws)
      the Constitution
      federal and provincial administrative agencies
      precedents established by judges
    • The Supreme Court of Canada has the final decision on constitutional questions and on important cases of civil and criminal law.
    • The federal government is responsible for issues that affect citizens across Canada - responsibilities that may have an impact on business operations include:
    • The federal government also oversees such industries as
      aeronautics
      shipping
      railways
      telecommunications
      atomic energy
    • Marketing boards control the supply or pricing of certain agricultural products. Consequently, they often control trade
      To smooth out the effects of these unusual conditions on this sector of our economy, and to ensure a steady supply of food to consumers at reasonable prices, six government agencies have been set up to control wheat and barley, dairy products, and poultry.
    • The Role of Government: Marketing Boards
      Canadian Wheat Board
      Canadian Dairy Commission
      Canadian Egg Marketing Agency
      Chicken Farmers of Canada
      Canadian Turkey Marketing Agency
      Canadian Broiler Hatching Egg Marketing Agency
    • Provincial governments are responsible for the following areas:
      regulation of provincial trade and commerce
      natural resources within their boundaries
      direct taxation for provincial purposes
      incorporation of provincial companies
      licensing for revenue purposes
      the administration of justice
      health and social services
      municipal affairs
      property law
      labour law
      education
    • The Role of Government: Municipal Government Responsibilities
      There are roughly 4,000 municipal governments in Canada that provide a variety of services.
      For example, they set regulations and laws regarding any establishment that serves food.
      Zoning requirements also limit the height of buildings and define how far they must be set back from the road.
    • Taxation of Companies
      The federal government relies on income tax and other tax revenue to fund its activities.
      The provincial governments rely on income tax and sales tax for revenue.
      Municipal governments rely on property taxes for their revenue.
      All businesses pay various taxes (a cost of doing business), which are passed on to the consumer in the form of higher prices.
    • Two halves of Fiscal Policy
      Taxation
      Government Spending
      deficit
      surplus
      takes $ away from the private sector
      national debt
      reductions in the national debt have been the result of surpluses; a surplus is an excess of revenues over expenditures
    • With the money it obtains from taxes, the federal government is the largest buyer of goods and services.
      Federal procurement policies can be used to influence regional economies and companies.
      NAFTA places limits on the federal government’s ability to use this spending power.
    • Exercise: Should governments be in the gambling business?
    • Government Spending: Monetary Policy
      Monetary policy is the management of the money supply and interest rates.
      It is controlled by the Bank of Canada.
      The more money the Bank of Canada makes available to business people and others, the faster the economy grows.
      To slow the economy, the Bank of Canada lowers the money supply.
    • Other Government Policies
      Provincial governments put up interprovincial trade barriers.
      Provincial governments spend billions on health, education, and social services; these funds are directed to local companies.
      Various governments may cooperate to provide loans, grants, or support for projects like Hibernia.
    • Government Expenditures
      The federal government has programs to assist business in depressed regions.
      Governments also spend huge sums of money on:
      education| health | roads | ports | waterways | airports
      various other services required by businesses and individuals
    • Government Expenditures: Purchasing Policies
      Contracts are awarded most often to help Canadian businesses even if they are sometimes more expensive than bids by non-Canadian companies.
    • Government Departments
      Industry Canada grants articles of incorporation, maintains records, and ensures fair competition.
      Image source: http://www.ic.gc.ca/ic_wp-pa.htm
    • Protecting Canadian Consumers
      Industry Canada regulates food ingredients, clothing labels, measurement accuracy of scales, and fuel pumps.
      Business must be aware that this department is responsible for product and consumer safety.
      There are legal responsibilities placed upon business by the federal government through various regulations and acts of Parliament.
    • Government Departments
      NRC: National Research Council
      Established in 1916
      Employs over 3,000 scientists and technicians
      Responsible for science and technology
      Promotes research and development
      Helps Canadian industry to innovate and remain competitive
    • Government Departments – DFAIT
    • Figure 3.5 Government Departments
    • Other Government Departments Protect Consumers
      CDIC insures all deposits in financial institutions up to $60,000.
      Provincial Governments regulate the stock exchanges in Canada, setting the rules for all public companies.
      Municipal Governments inspect buildings, set zoning regulations, license businesses, tax water, charge fees, regulate parking, etc.
    • Chapter Summary
    • Chapter Summary
    • Homework
      review
      Chapter 1
      Chapter 2
      and
      Chapter 3
      read
      Chapter 4
      do practice quiz before
      Sept 29th
      34
    • Image source: http://www.flickr.com/photos/vernhart/