Last week, I spoke with CFAX’s Pamela McCall on the provincial government’s new economic dividend wage mandate. Here is a transcript of that conversation.

Pamela McCall: Attention, government workers: how would you feel if you were rewarded when the economy is doing better -- if workers had a direct financial stake in the province's fortunes? The idea is being floated, and joining me with more on this is Jordan Bateman. He is BC director of the Canadian Taxpayers Federation.

Good morning, Jordan. Thanks for coming back on the show. Let's talk about this idea and where it came from: that workers in BC could stand to get a slice of the economic pie.

Jordan Bateman: It's actually more than an idea being floated. The BC Liberal government has concluded, or signed a tentative agreement with the health-sciences professionals, based on this model that they hope will spin out into all the other different public-sector unions.

Essentially what will happen is for a longer-term contract of at least four or five years -- or ten years, in the case of a teacher; I'm sure they'd look at that too -- in a longer-term contract, they'll look at actually sharing some of the benefit to the province that comes when the economy outperforms predictions.

So if there's a baseline assumption from the experts, as outlined in the BC budget, that the BC economy will grow by, say, 1% -- and the economy actually grows by 2%, as verified by Statistics Canada afterwards -- then the government workers will be able to share in a dividend worth about half of that money.

Yeah, it's certainly an interesting idea, and one that we've never seen floated anywhere in Canada, certainly. In fact, in looking around the world, we've yet to see this idea in place anywhere else.

McCall: It sounds kind of like WestJet, where you own a bit of it -- essentially, you benefit when the province benefits. But I find it interesting, the way that you guys have framed it in terms of the idea that workers are opposed to gas exploration and new mining and coal exports. Do you really think that workers are being led by unions to oppose these things?

Bateman: Well, certainly public-sector unions, led by their leadership, have been very vocal on these issues. None of these are just figments of our imagination; they're resolutions passed, for example, by the BC Teachers' Federation against certain projects. The BCGEU has come out against certain things. We all remember, probably, most vividly the Occupy Vancouver, where we saw big government-sector unions and the Jim Sinclairs of the world out marching with the so-called "99 percenters" against the very companies that all these unions have huge pension investments into.

It's an interesting concept, this idea. Can you get these government unions to actually start thinking about economic growth as a positive thing that may actually help their own workers?

McCall: And how does that change collective bargaining? You gave us that instance at the outset -- but in a larger sense, with unions in this province?

Bateman: I think it really turns it on its ear. We kind of have a tale of two Liberal governments that's gone on. In the pre-Olympic era, when the economy was booming and resource prices were through the roof, and Hydro was generating huge amounts of money for BC, Gordon Campbell and Carole Taylor essentially shovelled money off the back of the truck -- 18% raises over five years. They wanted to get Olympic labour peace -- huge raises for those folks.

Then you shifted into the post-apocalyptic. Maybe I'm watching too much "Walking Dead." [Laughter.]

McCall: We all are.

Bateman: The post-economic downturn. It really turned on its ear. All of a sudden it was about net zero -- two years of essentially a pay freeze, for lack of a better term. Then two years of cooperative gains, where any raises had to be found within that same contract. And now they're proposing this longer-term vision of slight increases. I think the health sciences are looking at 5.5% guaranteed raise over five years -- it's pretty modest, all things considered, for a five-year deal. And then this economic-growth dividend, which could generate a little bit more for them.

McCall: Obviously health-sciences professionals are into that. I mean, they're going to vote on it; is that going to happen?

Bateman: Yeah, they're going to vote on it. There's no guarantee they're going to accept it. The BCGEU has come out hard against this deal. They clearly don't want anything to do with it, and they're worried that if health sciences goes and approves it, that the government's mandate will be locked in. So the BCGEU is fighting it tooth and nail right now, but....

McCall: Why doesn't the BCGEU want to go for this? What do they stand to lose?

Bateman: Well, I'm not really certain. I don't think they like the idea of long-term contracts, I don't think they think 5.5% over five years is enough, and maybe they don't have the confidence in the provincial economy that some other people do.

In fairness to the GEU, de Jong released statistics that showed that over the last 12 years, six times economic growth has exceeded forecasts, and six times it's come under. In fact, in the last two years they've been almost bang-on -- just a slightly quicker-growing economy. I'm talking about a tenth of a percentage point -- so there may not be a whole lot of money to be gained there, and the BCGEU may be wary of that.

McCall: So this is rolled into their agreement -- and if they don't exceed economic expectations, they don't get the money?

Bateman: Yeah, exactly. And there's personal issues with the mandate, but it is very interesting -- this idea that government employees could be rewarded if the economy outperforms expectations.

McCall: Would some people see that as a bonus?

Bateman: Well, it should be a bonus, right? This is actually one of the flaws that we see with it. Instead of.... If the economy outperforms and they get one of these dividends, the word "dividend" would make you think, "Oh, it's a one-off bonus." It actually gets added to their base pay, so you could outperform one year....

McCall: Sounds very BC Ferry-esque.

Bateman: Yeah, exactly. You can outperform one year and then underperform the next, but government's not going to claw it back. It's added to your base pay.

For health sciences, they may sit back -- I can't speak for their negotiations -- but they may think, "Hey, if we exceed, this is really found money." It's better than getting 5.5% over five years and nothing else; this may actually turn into something pretty lucrative if BC's economy starts to boom.

McCall: And what if it doesn't? What if there are some lean years in this?

Bateman: Well, if there were lean years, it would just be zero. I mean, there would be no dividend pay to them, if they don't exceed the projection of economic growth.

It's an interesting thing, this idea of it has to exceed the projection. BC's economy.... Let's say it becomes red-hot next year, and we project 10% growth -- which would be outrageous and impossible, but if it's projected at 10% and only grows 9%, it's still great for BC, but these unions wouldn't get a dividend.