Module 2 - Role of Government in Business - Student.pptx
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Module 02: Role of Government in Business Opening Activity 1. Write down two laws/regs that impact you in your daily life 2. Turn to your neighbour (or a group of 3-4) and share what you wrote – grow your combined list until you have 5 laws/regs on your list 3. Share with the class 1....
Module 02: Role of Government in Business Opening Activity 1. Write down two laws/regs that impact you in your daily life 2. Turn to your neighbour (or a group of 3-4) and share what you wrote – grow your combined list until you have 5 laws/regs on your list 3. Share with the class 1.Don’t steal, road rules 2. Building codes, Don’t drink, drive, no urinating in public, no kill and paying your employees 2 In the news Canada’s Anti-Spam Legislation (CASL) Companies have to: 1. Obtain your consent 2. Provide identification 3. Provide an unsubscribe mechanism Difficult to enforce for spammers outside Canada Image source: Canada’s Anti-Spam Legislation. Government of Canada 3 In the news Sources: https://www.cbc.ca/news/business/tim-hortons-minimum-wage-worker-benefits-1.4480097#:~:text=Workers%20at%20nearly%20a%20dozen,increase% 20to%20%2414%20an%20hour 4 4. https://www.ctvnews.ca/business/highlights-of-sweeping-new-ontario-labour-laws-including-a-minimum-wage-boost-1.3689778 Learning Objectives 1. Canada is described as having a mixed economy. What does this mean and what are some of the historical events that led to the government’s involvement in business in Canada? 2. What are crown corporations and what role do they play in Canada? 3. How can laws and regulations support business success? How do laws and regulations challenge business success? What role do laws and regulations play in the protection of consumers? Provide examples. 4. What two policies does the government use to maintain economic stability and how do these policies achieve such stability? What are the two schools of thought on the government’s role in difficult economic times? 5. How do government spending, government purchasing 5 5 policies and government services benefit businesses in Module 02: Role of Government in Business Historical role of the Canadian government Historical role of government in the economy National policy High tariffs Encourage east to west trade Image sources: Canadian grocer July-December 1896 (1889). Maclean-Hunter Pub. Co.. Flickr: The Commons 7 7 Historical role of government in the economy Infrastructure Railway to connect the country Image source: Canadian Pacific Railway Company. Flickr: The Commons 8 8 Historical role of government in the economy Canada’s mixed economy Economic system in which some allocation of resources is made by the market and some by the government A mixture of capitalism and socialism 9 9 How government affects business Six categories Crown corporations Laws and regulations Tax and financial policies Government expenditures Purchasing policies Government services 10 10 Module 02: Role of Government in Business Crown Corporations Historical role of government in the economy Crown corporations Companies owned by the federal or provincial government – Provide services not offered by businesses – Bail out a major industry in trouble – Provide special services not otherwise being provided by private sector Image sources: Canada Post Corporation, Ontario Lottery and Gaming Corporation, Liquor Control Board of Ontario 12 12 Test your knowledge Governments throughout Canada are privatizing services that they have traditionally offered in response to: A. an opportunity to realize huge ongoing profits they will collect from private companies who acquire these services. B. new laws and regulations that have been passed mandating that these services be privatized. C. as a means to lower costs and improve efficiencies associated with the provision of these services. D. as a means of increasing the scope of their involvement in the economy. 13 13 Historical role of government in the economy Crown corporations Privatization: selling publicly-owned corporations Image sources: Air Canada, Canadian National Railway Company, Hydro One Networks Inc. 14 14 Module 02: Role of Government in Business Laws and regulations at all levels of government Laws and regulations Created by politicians who have been elected – Political parties in power can greatly affect the business environment – All stakeholders should be considered when laws and regulations are created, modified, approved and implemented Business law refers to rules, statutes, codes, and regulations that are established to provide a framework within which businesses must be conducted AND that are enforceable by court action – Examples include: product liability, sales, contracts, fair competition, consumer protection (eg. health and safety), advertising, Image source: Lane privacy, taxes, bankruptcy, intellectual Erickson/iStock/Thinkstock 16 16 Laws and regulations Laws and regulations Deregulation: government withdrawal of laws and regulations that hinder competition Image source: Air Canada 17 17 Laws and regulations Each level of government has their own unique set of responsibilities that have an impact on business operations Federal Provincial Municipal Responsibilitie Responsibilities Responsibilities s Trade regulations Regulation of Utilities/ (interprovincial provincial trade infrastructure and international) and commerce Play a role in Banking and Health care consumer protection monetary system Employment Regulating food National defence standards and establishments Immigration labour laws Zoning laws, Consumer Education parking Protection regulations, building codes Sources: etc. Region of Waterloo. (n.d.). Region of Waterloo [Facebook page]. Facebook. https://www.facebook.com/RegionWaterloo/ Government of Ontario. (n.d.). Ontario [Website]. https://www.ontario.ca/ 18 18 Government of Canada. (n.d.). Official symbols design standard:. Treasury Board Secretariat. https://www.canada.ca/en/treasury-board-secretariat/services/government-communications/design-standard/official-symbols-design-standard-fip.html Laws and regulations Competition Bureau Responsible for the administration and enforcement of a number of acts designed to protect consumers and promote fair competition Competition Act Ensures mergers of large corporations will not restrict competition Fair competition exists among businesses Provides consumers with competitive prices and product choices Image sources: Loblaw Companies Limited, Larisa Bozhikova/iStock/Thinkstock 19 19 CBC. (2023, July 27). Loblaw agrees to $25 million settlement over bread price-fixing claims. CBC News. https://www.cbc.ca/news/business/loblaw-bread-price-settlement-1.7274820 Laws and regulations Health Canada Responsible for: – Establishing standards for the safety and nutritional quality of all foods sold in Canada – Regulations related to food packaging, labelling and advertising Food and Drugs Act – Enforcement is done by the Canadian Food Inspection Agency – Monitors both exports (to maintain Canada’s reputation internationally) and imports 20 20 Laws and regulations Food recalls and business reputation https://www.canada.ca/en/news/archive/2009/07/report-independent-investigator-into-2008-liste riosis-outbreak.html Image source: Maple Leaf Foods Inc. 21 21 “Chief Food Safety Officer” “culture of food safety” “public interest and consumers first” 22 Image source: Food Safety Pledge, Maple Leaf Foods Inc. Laws and regulations Health Canada Agency is also responsible for regulations related to food packaging, labelling and advertising Creating a Buzz: Red Bull – Raging Bull | CBC.ca Image source: Red Bull GmbH 23 23 Video Reflection - Creating a Buzz: Red Bull With respect to consumer protection and safety, do you think enough is being done? Why or why not? 24 24 Laws and regulations Health Canada Are they on top of latest developments? – Canadian researchers cheer U.S. regulator's push for tighter rules on CB D | CBC News Image source: Leafly.com, TheCannibisInvestor.ca 25 25 Module 02: Role of Government in Business Tax and financial policies Tax and financial policies John Maynard Keynes vs. Friedrich Hayek ttom up approach Image source: University of Waterloo 27 27 Tax and financial policies Need for government oversight Future is uncertain – Act immediately, can’t wait for market Need for a quick spark Image source: University of Waterloo 28 28 Tax and financial policies Let the economy do the job – Don't bail out the losers Business cycles – busts were necessary to correct booms, if no booms (created by government intervention) then no busts No real end to the spending of the alternative model Image source: University of Waterloo 29 29 Tax and financial policies Which one did we choose? Image source: University of Waterloo 30 30 Tax and financial policies Fiscal policy: Government efforts to keep the economy stable through increases in – Taxes – Government spending Federal budget: Comprehensive report that reveals government financial policies and priorities for the coming year Image source: wildpixel/iStock/Thinkstock 31 31 Test your knowledge Your local newspaper has a story in its business section that reports that government spending will again exceed tax revenues. This means that the: A. national debt will increase. B. balance of payments will experience yet another deficit. C. rate of inflation is likely to fall. D. national debt will decrease. 32 32 Tax and financial policies National debt Accumulation of government surpluses and deficits over time – Deficit: government spending > taxes collected – Surplus: government spending < taxes collected Annual deficits contribute to the national debt, as governments have to borrow to fund deficits Image source: Debtclock.ca 33 33 Tax and financial policies Monetary policy: – The management of money supply and interest rates – Controlled by the Government of Canada Image source: Bank of Canada. Flickr 34 34 Tax and financial policies Monetary policy The Bank of Canada: Count on Us – Bank of Canada: Count On Us - YouTube Image source: Bank of Canada, MyWorldMyTime.org 35 35 Tax and financial policies Monetary policy The Bank of Canada: Count on Us – What are the key priorities for the Bank of Canada? Manage the complex financial system Preserve value of money Keep inflation low, stable, and predictable Image source: Bank of Canada 36 36 Tax and financial policies - Then Image source: https://www.bankofcanada.ca/2019/01/fad-press-release-2019-01-09/ 37 37 Tax and financial policies – Recently Image source: Bank of Canada raises policy rate 25 basis points, continues quantitative tightening - Bank of Canada 38 38 Tax and financial policies – Now Image source: https://www.bankofcanada.ca/2024/07/fad-press-release-2024-07-24/ 39 39 Discussion question What is the likely impact of rising interest rates? Rising interest rates will slow business activity and consumer spending – when the cost of borrowing goes up, businesses and consumers will borrow and spend less – the cost of servicing debt (i.e. interest) increases leaving less money for businesses and consumers to spend 40 40 Tax and financial policies 41 Tax and financial policies 42 Tax and financial policies The Subprime Mortgage Crisis – Subprime mortgages: loans targeted at people who do not qualify for regular mortgages Their credit records not good enough or no credit history – Interest rates increased – couldn’t afford payments – Housing prices started to fall and couldn’t afford to sell homes either foreclosures – Value of mortgage-backed securities plummeted – US Congress approved US$700 billion bailout in October 2008 to stabilize financial sector and reinforce financial institutions 43 – Module 02: Role of Government in Business Government expenditures Government expenditures Governments spend huge sums of money on: Education Health Transportation systems Payments to individuals 45 Images: Student created by Karthick Nagarajan from the Noun Project, Heart created by Christopher Holm-Hessen from the Noun Project, 45 Plane is public domain from the Noun Project , Payment by Lemon Liu from the Noun Project Government expenditures Financial aid Grants, loans, consulting advice Help industries and companies ces: https://www.theglobeandmail.com/report-on-business/top-50-report-on-business-the-funding-portal/article19192109/ 46 46 Module 02: Role of Government in Business Government purchasing policies and services Government purchasing policies Large purchasers and consumers of goods and services Can favour Canadian businesses e source: https://www.tpsgc-pwgsc.gc.ca/app-acq/cndt-cndct/index-eng.html 48 48 Government services Innovation, Science and Economic Development Canada (formerly Industry Canada) https://www.ic.gc.ca/eic/site/icgc.nsf/eng/home Global Affairs Canada (formerly Foreign Affairs, Trade and Development Canada) https://www.international.gc.ca/global-affairs-affair es-mondiales/home-accueil.aspx?lang=eng 49 49 End of module reflection What side are you on? A. Government should reduce its involvement in business through further privatization and deregulation and let the market take care of itself because… B. Government should continue to influence the market with activities that keep our economy stable, support Canadian business and keep consumers safe because… 50 50 End of module reflection Reasons government should provide subsidies: Encourage Production Support employment Support new/developing industries Encourage social goals Reasons government should not interfere in the private sector: Misallocation of resources Market Distortions Dependency or moral hazards Reduced Competition 51 51 For next week : a n d l e 3 s h i p o du e u r M p ren mall n t re a S E i n g r t S ta n e s s i Bu s p te r7 C ha d Rea 52 52
