Chapter 4 - Role of Governments Textbook Notes

4 Pages
79 Views
Unlock Document

Department
Accounting & Financial Management
Course
AFM 131
Professor
Robert Sproule
Semester
Fall

Description
Chapter4-RoleofGovernment Government Affects Business The 6 categories of government involvement in business:  Crown corporations - their role in the economy, sometimes competes with for-profit private businesses  Laws and regulations – taxation and consumer protection to environmental controls, working conditions and labour-management issues  Taxation and financial policies - collect taxes, to achieve certain goals and effect certain policies  Government expenditures - provide direct and indirect aid: tax reductions, grants, loans and loan guarantees  Purchasing policies - single largest purchaser, huge effect on industry and economy as a whole  Services - direct and indirect activities: helping companies globalize, training and re-training the workforce Government Involvement in the Economy  We have a mixed economy in Canada which relates to the allocation of resources by both the market and the government  We have been over-shadowed by the U.S. economy- developed faster with products either not made in Canada or not available because of a weak east/west distribution system  Led the federal government to the development of the National Policy – high protective tariffs  Government intervention direct towards creating a stable economy (trade agreements) Crown Corporations  Reasons they were created: provided services not being provided by businesses (Air Canada), bailed out a major industry in trouble (CNR), and provided special services that were not otherwise available (Bank of Canada)  Many crown corporations have been privatized (reducing government involvement in business) to lower prices to consumers through, in part, improved efficiencies  Other private industries have been deregulated – withdrawal of certain laws and regulations that seem to hinder competition  Issues with the privatization of the Liquor Control Board of Ontario: o Customer convenience o Revenue sources – ownership versus alcohol taxes o Sin tax as a deterrent to consumption Laws and Regulations  Laws derived from: the Constitution, precedents established by judges, provincial and federal statutes, and federal and provincial administrative agencies  Constitution defines the powers that can be exercised by the federal and provincial government Federal Government Responsibilities  Primary: ensure and support the country’s economic performance o Includes overseeing important industries – aeronautics, shipping, railways, telecommunications and atomic energy  Responsibility overlap with provinces on health - federal government responsible but provincial government implements (large and growing transfer payments)  Industry Canada: administers a variety of laws affecting businesses and consumers o Competition Act: control large mergers and foreign buyouts to ensure fair competition o Discriminatory pricing, price fixing, misleading advertising, and labelling laws o Hazardous Products Act, Weights and Measure Act, Food and Drugs Act o Competition Bureau: Charges and fines have been imposed on a number of companies regarding price fixing on retail gasoline (identical prices in and of themselves are not evidence of price fixing)  Marketing boards control the supply or pricing of certain agricultural products – give stability to important areas of the economy that are normally volatile (weather, disease, unstable prices and impact of large agri-business companies and millions of independent farmers) o Criticisms: does not permit normal competition, raises prices for consumers o Canadian Wheat Board (lost their monopoly late in 2012), markets wheat and barley while other Boards control production through quotas  Now farmers are free to sell however much to whoever they want Provincial Responsibilities  Primary responsibility: issues that impact provincial residents specifically o Health care and education o PPPs – Public-Private Partnerships in health care with private business doing the design, build, and operations of the facilities while the governments in turn lease  Issue: may not be necessarily cheaper or more efficient  Private profit from public health care budget, eventual erosion of quality service  The Agreement on Internal Trade (provincial free trade) agreed to reduce and eliminate barriers to the free movement of persons, goods, services, and investment within Canada o More efficient, increased market access for Canadian companies, facilitating worker mobility (ex: recognizing certification from other provinces) Municipal Responsibilities  Authority defined by provincial legislatures  Provide services such as: wager supply, sewage and garbage disposal, roads, sidewalks, street lighting and building codes  Also play a role in consumer protection –food safety inspectors and zoning laws (noise, odours, and signs)
More Less

Related notes for AFM 131

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit