Economy and Environment National Debt Trickle-down-effect NAFTA Globalization Kyoto Protocol

Spender vs Saver During the post war boom years, Canada had been a nation of savers who bought items with cash Now it was becoming a nation of spenders who bought on credit Consumerism becoming a way of life

National Debt High unemployment meant that government revenues fell as less people paid income tax and more required government assistance In turn The government had to borrow money to pay for social services and the national debt grew

Government in Debt Both provincial and federal governments ran deficits as government expenditures were higher than government incomes Many social programs cut but this only made the reliance on credit for individuals worse

Trickle Down Effect President Reagan's economic theory that with a lower tax burden and increased investment, business can produce (or supply) more, increasing employment and worker pay. Give tax breaks to big business in the hopes that they would help out regular people

Mulroney’s Plan to Solve the Debt Mulroney used the trickle down approach to cut the national debt -Cut taxes -Cut social programs -Dismantled the Foreign Investment Review Agency to encourage more US investment -Canada is open for business

SHOCKER! It Did Not Work Mulroney’s plan did not work Canada was hit by a recession in Businesses failed -Workers lost jobs -Debt increased -Government forced to increase taxes This failure led to the Conservatives losing the 1993 election

Free Trade In 1987,Mulroney started negotiations for the Free Trade Agreement with the US -Remove tariffs on goods crossing the boarder and opened Canada to US investment and visa versa Very controversial issue

Free Trade Debate SupportOppose Eliminating tariffs will lead to more US investment and this will help the Canadian economy grow Free trade will give Canada access to a larger US market. With higher demand, Canada can sell products at lower prices and be competitive in international markets Once protective tariffs are removed, US branch plants will move back to the US and we will lose jobs US companies will flood our markets and Canadian business will not be able to compete Economic union may lead to political union and a loss of Canadian independence

FTA Established in 1989 Tariffs eliminated between Canada and US -Complete free trade by 1999 Cultural industries were exempt allowing Canada to retain protection of TV, publishing, films ect. Some restrictions to ensure fair competition

North American Free Trade Agreement 1992 NAFTA was a free trade agreement between US, Canada, and Mexico Mulroney expanded the FTA

NAFTA Debate SupportOppose Most companies will remain in Canada because Canadian workers are better educated and skilled Canada also appealing due to transportation and communication systems, social security, and stability Most companies will move to Mexico to take advantage of lower wages and less strict pollution laws -Loss of Canadian jobs

Chretien and the National Debt Chretien and the Liberals came to power in Inherited debt of 459 billion Solution was to invest 6billion into the economy through public works such as road repairs and new bridges -Create jobs and workers spend and boost economy

1994 Financial Crisis At the end of 1994 interest rates shot up Provincial and federal governments used 43% of revenues to pay off interest -Had to eliminate more than jobs in federal civil service -drastically reduce transfer payments to provinces to pay for post-secondary education, health care, and welfare

Canadians Paying the Price Universities and colleges had to raise tuition rates Health care costs rose rapidly -New technologies and an aging population put a heavy demand on the system -Hospital wards closed, length of stay reduced -Staff cuts and nurses replaced with less trained care aids Growing number of children in poverty

Chrétien extends a ‘Shawinigan handshake’ Feb. 15, 1996 Prime Minister Jean Chrétien commemorating the first National Flag of Canada Day was confronted by protester Bill Clennett. Chrétien grabs Clennett's throat and forces him to the ground. The 44-year-old man was part of a small but vocal group protesting planned cuts to unemployment insurance benefits. The prime minister, a self- described "little guy from Shawinigan,”

Globalization The FTA and NAFTA were part of globalization trend sweeping the world by the end of the 20 th century The result of rapid changes in communications technology and the fall of communism -Internet made it possible to do business anywhere in the world

Globalization Debate SupportOppose Powerful trend that will increase living standards for everyone When large corporations invest in less industrialized countries, jobs and economic opportunities are created Makes business rich at the cost of workers everywhere -Move production to countries with lower labour costs and less strict environmental laws Ex. China -What about trading with unethical nations

Globalization made Canadians ask if it is ok to do business with nations that violate human rights or environmental rights laws

Kyoto Protocol The Kyoto Protocol is an international treaty, which sets targets for reducing greenhouse gases 2005 By countries had signed it Harper government did not meet goals As of 2006 our emission levels were 22% higher than the 1990 level