Chapter 4

1. Chapter 4

2. Learning Objectives • Historical Role of Government • Activities that impact business • Major crown corporations • Federal budget and national debt • Canada’s innovation strategy

3. Historical Role of Government in the Economy • 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 East-West • Tariffs were used to deter the natural North-South flow of goods

4. Historical Role of Government in the Economy • 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.

5. The Author Systems of Survival - Ethics of Governance • The Book

6. Systems of Survival - Ethics of Governance • 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

7. Sway Business Suasion Coercion Taxation Purchasing Promotion Subsidies Standards Access Sway Government Investment Employment Information Privatization Lobbying Contributions Litigation Role of Government & Business

8. Commercial Shun Force Voluntary Agreements Be Honest Collaborate Easily with Strangers & Aliens Compete Respect Contracts Guardian Shun Trading Exert Prowess Be Obedient & Disciplined Adhere to Tradition Respect Hierarchy Be Loyal Take Vengeance Jane Jacobs Moral Syndromes

9. Commercial Use Initiative & Enterprise Be Open to Inventiveness & Novelty Be Efficient Promote Comfort & Convenience Guardian Deceive for Sake of Task Make Rich Use of Leisure Be Ostentatious Dispense Largesse Be Exclusive Show Fortitude Jane Jacobs Moral Syndromes

10. Commercial Dissent for Sake of Task Be Industrious Be Thrifty Be Optimistic Guardian Be Fatalistic Treasure Honour Jane Jacobs Moral Syndromes

11. Crown Corporations • 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,

12. Crown Corporationshttp://www.canada.gc.ca/depts/major/depind_e.html Website listing all the crown corporations and government agencies

13. Laws and Regulations • Nickels text says 4 sources • Constitution • Judicial precedents • Federal and provincial laws • Federal & provincial agencies • There is also • Municipal laws and regulations • Water, Sewage, garbage pick-up • Snowplowing, streetlights, police, emergency services • Parks, libraries • Building codes

14. Registration, Reporting and Information • 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

15. 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

16. Government Spending of Tax Dollars • 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

17. Government Spending of Tax Dollars • Monetary Policy - how governments manage the money supply • How many dollars floating around for people to use • Too much money around, we get inflation

18. Other Government Policies • 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

19. Other Government Policies • Transfer payments • An issue among provinces as to who gets what

20. 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 by various regulations and acts of Parliament

21. 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.

22. Employment and Immigration • Two government departments have a large impact on business: • The Department of Citizenship and Immigration • The Department of Human Resources Development

23. 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

24. Canadian Farming • 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

25. Canada’s Innovation Strategy