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British Columbia Finance Minister Kevin Falcon in Victoria, B.C., on Friday August 26, 2011.Darryl Dyck/ The Canadian Press

A gloomy economic chat with his federal counterpart Jim Flaherty has strengthened provincial Finance Minister Kevin Falcon's resolve to hold the line against wage demands from B.C.'s 25,000 public servants.

"There's not a penny more," Mr. Falcon declared Wednesday, referring to the government's proposed 3.5-per-cent wage increase over two years. "It's just not going to happen. [To say otherwise] would be giving their union false hope."

Mr. Falcon drew his line in the bargaining sand after Mr. Flaherty briefed the country's finance ministers Wednesday on deliberations during the recent G20 gathering in Los Cabos, Mexico.

He confirmed that the international situation is not improving, Mr. Falcon said. "Unfortunately, the world's economy is rapidly slowing, and there is a huge amount of uncertainty out there."

He said Mr. Flaherty's report reinforced his determination to stick with the current government wage offer, despite a brief strike by some members of the B.C. Government and Service Employees' Union earlier this week.

"It may not be everything the union wants, but given what's going on in the world today, it's actually not unreasonable," Mr. Falcon said, noting that the offer also contained job security guarantees for members of the BCGEU.

He said he is not willing to add to the government deficit or increase taxes to cover a larger wage increase.

Adding to his tough message, B.C.'s Finance Minister reiterated that government employees may end up with less money, if they go out on a full-scale strike. "Our offer will be withdrawn, and I can tell you for sure, future offers will not be as good."

Asked if this was a way of punishing the union, Mr. Falcon replied: "Sure. They're punishing us with a strike, and in return, we're saying: That offer was put in place when we hoped things were going to get better, and that may not be the case now. So obviously we would have to take a second look."

The BCGEU is in a legal position to call its first strike since 1988. The union shut down three liquor distribution branches for 24 hours on Tuesday, but has not yet announced plans for future job action.

Union negotiators are seeking a two-year contract providing a wage increase of 3.5 per cent in the first year, followed by a cost-of-living adjustment in the second year.

Mr. Falcon's renewed rigidity contrasts with the relative flexible, public position that BCGEU has taken since asking a mediator to book out of the dispute.

Union president Darryl Walker said the BCGEU is willing to adjust its demands at the bargaining table, and called on the government to do the same.

"It's unfortunate that the Finance Minister has taken that position, but we're just going to have to work around that," Mr. Walker said. "Hopefully, a sober second look will be taken, and we can find the middle ground that will get us the collective agreement we need."

The parties are not that far apart, he said. "It would just take a little bit of movement, and frankly, that movement should be considered on both sides."

Concerning the Finance Minister's concern over the impact of a faltering world economy on the government's bottom line, Mr. Walker noted that corporate and banking CEOs continue to harvest big bonuses "and we're stuck picking up the scraps. We are the leanest public sector in the country, and there has to be something so our folks are at least recognized for what they do," he said.

Mr. Falcon said the government is able to afford a 3.5-per-cent wage increase, thanks to savings found within existing public operations.

In an odd twist, the Finance Minister did not rule out the possibility the union itself could finance a further increase by striking and saving the government millions of dollars in payroll costs.

"It could play a role," Mr. Falcon said. "I hope it doesn't get to that, but it's true. A strike saves us money."

He said the government is also open to discussing a one-year agreement, instead of a two-year pact, in hopes the economy may begin to improve next year. "I wouldn't rule anything in, or out."

However, the Finance Minister made no apologies for his hardline stance on money, and threatening to remove the government's offer from the table, in the event of a strike. "I know it's tough, but life is tough."

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