Nova Scotia unions will fight McNeil government about 5-year contracts

The number one issue for Stephen McNeil's government over the next year is the negotiation of contracts for the entire public sector.

On Tuesday, Finance Minister Randy Delorey invited leaders of 11 unions, plus the Nova Scotia Federation of Labour, to discuss what he billed as a new approach to public-sector bargaining.

I can't remember anything quite like it, at least in Nova Scotia.

What the minister said

The minister pitched the meeting as a dialogue, but it ended up as more of a monologue.

As government meetings always do, it started with a Powerpoint presentation.

The presentation made the obligatory obeisance to the Ivany Report, then laid out the government's conditions: no new taxes; a balanced budget; no reduction in public services.

All of that sounds attractive, and why not? Those three ideas are the political trifecta.

Then the inevitable kicker: to get there, says Delorey, the government wants new five-year contracts that cost no more than the old contracts.

Net zero

This kind of bargaining framework is usually referred to as "net zero."

Net zero means any increase in the wage and benefit package has to be offset by an reduction somewhere else in the package.

The slight twist in Delorey's proposal is that savings can come from anywhere in the public sector. That's the only reason Delorey can keep a straight face when he insists he's not proposing a five-year wage freeze.

Unions will not sign on

It won't work. The unions will never sign on.

First off, they will never agree to any wage freeze, never mind one lasting for five years.

Moreover, the escape hatch offered by the minister is a total nonstarter.

One of the great myths of politics is that there is a huge amount of waste and inefficiency in government, and if we could just find it, our financial problems would be solved.

The minister is being naive if he believes union members will be able to step forward with significant savings that haven't been found in wave after wave of cost cutting and belt tightening.

So the unions will fight.

They will start by hammering away at every remotely questionable expenditure. That's the way the NSGEU's Joan Jessome is going already, and Jessome knows what's she doing. Delorey is her ninth finance minister.

Plan won't work

Delorey's plan won't work anyway.

As I've said countless times before, there is only one issue in provincial finance: the unsustainable cost of the status quo in health care.

Wages have been one of the cost drivers, but it's far from the only one. They are also notoriously difficult to tame. You can suppress them for a while, but they always bounce back.

Until we tackle the real cost drivers in health care — drugs, technology, rates of utilization, the social determinants of health, and end of life care, to name only a few — the province's finances will not be sustainable.

How it will play out

The McNeil government must know perfectly well that net-zero bargaining won't work.

Perhaps they are ready to bend. Maybe they will agree to a two or three-year contract. Maybe they will agree to one per cent annual increases, like the New Brunswick nurses just did.

But if that's the plan, they would not likely have been so public with their opening bargaining position. Backing off now will make them look weak. For better or worse, that's not Stephen McNeil's style.

The more likely scenario is that the government knows the unions won't agree, and so is laying the groundwork for wage-freeze legislation. That legislation could come as early as this fall but more likely after negotiations break down over the winter.

The unions will make the passage of that legislation as politically painful as possible.

Anticipating just this scenario, the McNeil government passed essential services legislation last year. They will never face the kind of health-care strike that weakened every government for the last twenty years.

After much tumult, the wage-freeze law will pass. The inevitable court challenge will not be resolved until well after the next election.

The political question is whether the electoral benefit of a balanced budget will outweigh the damage suffered in passing the wage-freeze law. The Liberals must believe the answer is yes.