For Premier David Alward, 2013 could be the year when his “collaborative” approach to public-sector unions faces its biggest test.

He will have to decide whether to continue trying to work things out or whether to adopt a tougher strategy like that of his predecessor, Liberal Frank McKenna.

“We've said from square one that we want to deal with our employees in a fair way and in a collaborative way,” Alward tells CBC News, pointing to how he involved several unions in discussions on how to reform public-sector pension plans.

In 1991, McKenna used legislation to break several public-sector contracts so he could freeze wages. It led to unprecedented protests by organized labour, but it also helped him eventually balance the provincial budget.

“I was broken hearted that I had to undertake painful measures that I knew would hurt a lot of people but that I knew had to be done,” McKenna says now.

The provincial government had a large deficit at the time and the federal government had just slashed transfer payments to the provinces. But McKenna says the move was still a risk.

“It was politically extraordinarily difficult because it was within months of an election and we ended up facing protesters everywhere,” he said.

McKenna said in a recent interview that his wage freeze policy eventually led to four years of labour peace. (CBC)

Those protests in April 1991 created some of the most memorable images from McKenna’s tenure as premier.

Because of some confusion among his staff, McKenna ended up having to wade through some of the estimated 3,000 to 4,000 angry unionized workers clogging the streets of downtown Fredericton.

“I gotta go home and tell my wife that I lost 6.5 per cent,” one worker shouted as he came face-to-face with the premier.

“You can tell your wife and children that we made a decision that is in the best long-term interests of New Brunswick,” McKenna shot back.

“You can tell your wife and children that I saved your job, that I've made this province more financially secure and I've avoided raising taxes for the people of New Brunswick.”

1991 protests became a defining moment

Philip Lee, the author of a biography of McKenna, says it was a defining moment for McKenna, when he put the issues underlying contract talks in the public eye for the first time.

“He understood what leadership was, that he had to be a visible leader,” Lee says.

“It moved the debate into the public and it really stayed there. It was kind of an extraordinary moment in politics.”

The following year, after the provincial government extended the legislated freeze, the Canadian Union of Public Employees launched a general strike.

That prompted a compromise: McKenna agreed to restore the contracts, but with extensions that included wage freezes in the add-on years.

“We ended up with about four years of total labour peace and with a large amount of latitude for us to lower the cost of servicing the public sector wage package,” McKenna says.

His government balanced the budget for the first time in 1995, running a $40-million surplus.

New financial challenges

Premier David Alward's government is facing a $356-million deficit, which is nearly double the amount projected in March. (CBC)

Two decades after McKenna’s compromise, Alward is facing a suffocating deficit of his own.

The most recent quarterly report from the Department of Finance projects a $356-million deficit in the current year, twice as much as originally forecast in the budget tabled in March.

Alward won’t say exactly what the provincial government’s position will be when it sits down with CUPE at the bargaining table.

“We have a mandate that we are working within now,” he says.

“There will be a new mandate taken for the next round. But we've said that we want to deal with our employees in a fair and open way, and we've said that from square one, through good times and tough times. And these are tough times.”

In the spring, several union leaders proclaimed it “a historic day” when they signed on to Alward’s pension reforms, which include what’s called a “shared-risk” model.

Employees will have to pay slightly more, and will have to retire slightly later. As well, in years when the markets don’t perform well, cost-of-living increases will be delayed.

But in return, unions have the assurance that the pension fund will be sustainable, something that wasn’t the case before.

Unions willing to be modest

Gordon Black, a CUPE official, said unions are used to bargaining in difficult financial times. (CBC)

“Alward has said he wants a collaborative approach,” says Gordon Black, CUPE’s regional director.

“We have talked to them and continue to talk to this government.”

Black was a rookie union organizer in 1991 and helped bring workers out to that protest where McKenna was confronted over and over again.

“Unions are used to bargaining and bargaining in hard times, and working out solutions,” Black says.

“But when governments come in with the heavy-handed approach and change collective agreements through the legislature, that's unacceptable.”

Black says CUPE has shown in the past it’s willing to be modest in its demands when the province’s fiscal outlook is grim.

He says Alward knows the history of what happened in 1991 and he expects the premier won’t adopt the same strategy McKenna did.

“They know the reaction it caused once. And they should understand that it will cause similar reactions in the future, because workers have to be willing to stand up for their rights,” he said.

Unique situation

Lee says McKenna’s situation was unique, because his Liberals held every seat in the legislature and were guaranteed to win re-election later that year against three weak, disorganized opposition parties. No other premier has been in that strong a position since, he points out.

“What's really defined governments since McKenna is the overriding concern that you need to get re-elected and it's in a way guided public policy to a certain degree,” he says.

McKenna says he has a better appreciation now for why unions consider contracts sacred. But he still defends his push for a wage freeze.

“The more privileged people in our province were those working for the government, with generally secure positions, with benefits, with pensions, and with reasonably good salaries,” he says.

“And it only seemed fair that if government had to cut back that they, including elected people, share the burden. And that's why we introduced wage freezes.”

McKenna sidestepped a question on whether his efforts were all for naught, given New Brunswick is again facing a large deficit.

He says the 2008 economic crisis forced governments to spend money stimulating the economy.

But, he adds, “I'm of the view that the quicker we get back to balance, at the provincial level and the national level, the better.”