An economist who has given Newfoundland and Labrador's premier his best ammunition during his war with Ottawa over equalization says Danny Williams needs to act to get the offshore oil industry back on track.

Wade Locke, a Memorial University economist who found the new equalization formula will see Newfoundland and Labrador lose more than $1 billion over the next 13 years, told a business group on Monday that the province's energy industry needs attention.

Economist Wade Locke says the Newfoundland and Labrador government should move on developing new oil projects.
(CBC)

"It's time for us to move on here, guys," Locke told a Rotary luncheon in St. John's Thursday.

"We need to develop the White Rose extension and we need to have Hibernia South go forward. That's in our interest to do."

Williams has come under fire from Opposition politicians and companies working in the offshore industry for his hard-nosed approach to the oil industry.

For instance, talks on developing the Hebron megaproject were shelved in 2006 when Williams insisted that the project's partners give the provincial government an ownership stake of almost five per cent.

Earlier this year, the province halted immediate progress on the Hibernia South extension, when it called for more information on benefits that would accrue from the development.

Locke, who has specialized in studying the offshore oil industry from its earliest stages, pleaded with government and industry players to work together.

"Getting these two projects to move forward would give us the correct signal," Locke said.

"And what's the correct signal? In my opinion, we're recognizing the importance of the oil and gas sector to our economy, and we want to encourage this continued contribution."

Locke's work on equalization and the Atlantic Accord have been followed closely in political circles.

This spring, when he determined that Newfoundland and Labrador would actually benefit from the new equalization formula, federal Conservatives championed his work.

However, Locke dramatically revised his analysis when he obtained full details from the federal Finance Department on how the new equalization formula will work.

He found that Newfoundland and Labrador will not only lose money as compared to the status quo, but the province would have received about $11 billion more over the next 13 years had Prime Minister Stephen Harper maintained a 2006 pledge on equalization.

During the campaign for that winter's election, Harper pledged in writing to exclude non-renewable resources from the equalization formula. The turnabout among the federal Conservatives has angered Newfoundland and Labrador, Nova Scotia and Saskatchewan.

Locke's new analysis appeared to catch federal Conservatives off guard. Loyola Hearn, Newfoundland and Labrador's federal cabinet representative, described Locke's revised calculations as "strictly hypothetical stuff."

Meanwhile, Locke said he does not agree with arguments — such as those advanced by Conservative MPs — that the Atlantic Accord remains safe with the new budget.

Locke argued that the new budget breaks the letter and the spirit of the Atlantic Accord.

"When people say there were no changes to the accord — there were significant changes to the accord," Locke said. "The protection provided by the accord is undermined."

Locke is the co-author of a new Atlantic Provinces Economic Council report, which determined that all four Atlantic provinces will collectively receive about $4 billion less from equalization between now and 2020.