Transcript No Slide Title

Chapter 4
The Role of
Government in
Business
Learning Objectives
1.
2.
3.
4.
5.
Historical Role of Government
Activities that impact business
Major crown corporations
Federal budget and national debt
Canada’s innovation strategy
Historical Role
of Government in the Economy
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Canada has a mixed economy – our
various levels of governments play a
large very role in our economy
From the start in 1867 the National
Policy was to force trade to flow EastWest
Tariffs were used to deter the natural
North-South flow of goods
Historical Role
of Government in the Economy
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A railroad was built with government
assistance to achieve national unity!
Americans have less government
involvement in their economy – more
goods and services are provided by
the private sector. Following the
terrorist attacks the federal
government allocated funds to New
York City and the airlines.
Systems of Survival Ethics of Governance
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The Book
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The Author
Systems of Survival Ethics of Governance
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The dynamic tension created by two
value systems results in economic
growth.
The ethics/values of each syndrome
(guardian or commercial) are
necessarily different
These are two different worlds with
different rules of operation
Role of Government & Business
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Sway Business
Suasion
Coercion
Taxation
Purchasing
Promotion
Subsidies
Standards
Access
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Sway
Government
Investment
Employment
Information
Privatization
Lobbying
Contributions
Litigation
Jane Jacobs
Moral Syndromes
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Commercial
Shun Force
Voluntary Agreements
Be Honest
Collaborate Easily with
Strangers & Aliens
Compete
Respect Contracts
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Guardian
Shun Trading
Exert Prowess
Be Obedient &
Disciplined
Adhere to Tradition
Respect Hierarchy
Be Loyal
Take Vengeance
Jane Jacobs
Moral Syndromes
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Commercial
Use Initiative &
Enterprise
Be Open to
Inventiveness &
Novelty
Be Efficient
Promote Comfort &
Convenience
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Guardian
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Deceive for Sake of
Task
Make Rich Use of
Leisure
Be Ostentatious
Dispense Largesse
Be Exclusive
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Show Fortitude
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Jane Jacobs
Moral Syndromes
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Commercial
Dissent for Sake of
Task
Be Industrious
Be Thrifty
Be Optimistic
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Guardian
Be Fatalistic
Treasure Honour
Crown Corporations
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Governments own companies are called Crown Corporations
Examples – AECL, CBC, Canada
Post, Bank of Canada, etc.
Some provinces use crown
corporations to invest in the
province - Caisse de Dépôt in
Quebec is an example
The trend is towards privatization,
Crown Corporations
http://www.canada.gc.ca/depts/major/depind_e.html
Website
listing all the
crown
corporations
and
government
agencies
Laws and Regulations
Nickels text says 4 sources
1.
Constitution
2.
Judicial precedents
3.
Federal and provincial laws
4.
Federal & provincial agencies
There is also
5.
Municipal laws and regulations
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Water, Sewage, garbage pick-up
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Snowplowing, streetlights, police, emergency services
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Parks, libraries
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Building codes
Registration, Reporting and
Information
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Companies must register
“Articles of Incorporation” with
the government
The legal entity (new company)
must file tax returns and
financial statements with the
government
Companies must file statistical
data with the government as
requested
Taxation of Companies
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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
Government Spending
of Tax Dollars
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Fiscal Policy - how governments
collect and spend tax dollars
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
Government Spending
of Tax Dollars
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Monetary Policy - how
governments manage the money
supply
How many dollars floating around for
people to use
Too much money around, we get
inflation
Other Government Policies
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Strangely enough, provincial
governments put up interprovincial trade
barriers
Provincial governments spend billions on
health, education and services - these
funds are directed to local companies
Various governments may cooperate to
provide loans, grants or support for
projects like Hibernia
The federal government has programs to
assist business in depressed regions
Other Government Policies
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Transfer payments
An issue among provinces as to who
gets what
Protecting Canadian Consumers
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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 by various regulations
and acts of Parliament
Other Government Departments
Protect Consumers
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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.
Employment and Immigration
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Two government
departments have a large
impact on business:
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The Department of Citizenship
and Immigration
The Department of Human
Resources Development
National Research Council
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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
Canadian Farming
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High Risk - dependant upon
unreliable weather (floods,
droughts, etc.)
Marketing Boards - developed
by the government to stabilize
prices and farm incomes
The Boards - control supply,
imports, pricing, inventory and
sales of some farm products
The trend is towards freer
competition in this sector
Canada’s Innovation Strategy