Newfoundland and Labrador's premier ordered the removal of all Canadian flags from provincial government buildings Thursday.

Danny Williams made the order in retaliation for an offer from the federal government on offshore royalties he calls a "slap in the face."

  • From Dec. 22: Offshore talks over: Williams
  • Williams says the flags would be taken down and kept out of sight until Ottawa offers his province a fair deal.

    "This is a clear signal to Ottawa that Newfoundland and Labrador will not be taken for granted," said Williams in the news release.

    Danny Williams

    Danny Williams

    "The federal government has turned its back on the people of this province and we will not accept less than what was committed to by the prime minister, and to what we deserve."

    Williams said offshore revenue talks with federal Finance Minister Ralph Goodale in Winnipeg were fruitless.

    Williams says the latest federal deal would cost the provincial government $1 billion in eight years, and "falls far short" of Prime Minister Paul Martin's federal election campaign promise.

    "When you come into this room for press conferences in the future, that flag won't be there," Williams told reporters.

    "Why would we fly their flag and pretend everything is rosy?"

    Goodale says he is disappointed by Williams' decision, and that the federal government is still willing to keep bargaining with Williams.

    Williams, who had set a Christmas deadline for a new deal, said he has no intention of keeping talks with the federal government open.

    That's not the case for Nova Scotia, though. Premier John Hamm, who was also involved in the discussions, has said he will return to negotiations in January.

    The provinces have been pushing to retain 100 per cent of offshore energy revenues without paying a penalty in clawbacks to equalization payments.

    Ottawa now takes 70 cents of every dollar by reducing equalization payments.

    Finance officials have said that under the latest offer, Ottawa will end the clawback scheme. This would result in additional revenues for the provinces, ranging from $2.5 billion to $3 billion, they say.

    Williams also objected to a condition that required the province to eliminate its $700-million deficit in order to receive increased benefits from offshore revenues beyond eight years.