Premier Danny Williams: 'The indication over the next three years is a pretty crippling effect.' (CBC)

Newfoundland and Labrador Premier Danny Williams is calling on opposition parties to show Prime Minister Stephen Harper the door, following a federal budget he described as callous.

Williams said the fine print in changes to the federal equalization program, contained in the budget that Finance Minister Jim Flaherty delivered in Parliament Tuesday, have left him no choice but to rekindle his notorious battle with the governing Conservatives.

"It's a good indication of the punitive, vindictive, nasty side of this prime minister," Williams said. "The indication over the next three years is a pretty crippling effect."

On Tuesday night, Williams called on the federal Liberals to defeat the budget, although he adopted a slightly different strategy on Wednesday, after Liberal Leader Michael Ignatieff spoke in Ottawa. Ignatieff said he was putting Harper and his Conservatives "on probation" before triggering anything that would bring down the minority government.

Williams said he would ask Ignatieff to propose amendments that would return Newfoundland and Labrador's fiscal position to what he called the status quo. New changes to equalization that would affect offset payments, which are made to provinces as they adjust to swings in economic fortune, would amount to a loss of more than $1.5 billion over the next three years, Williams said.

Though willing to work with Ignatieff on amendments, Williams lashed out again Wednesday against Harper, describing the policy changed tucked into massive budget documents as "a unique solution to nail Newfoundland and Labrador.

"This was a strategy," said Williams, adding the federal government's agenda seemed to have been "how can we get the maximum shaft [against] Newfoundland and Labrador."

Speaking with reporters, Ignatieff said he was not impressed that the budget included "unilateral" changes to equalization that penalized both Quebec and Newfoundland and Labrador.

He said the Liberals would urge the Tories to "rethink" their policies, but did not say what he was prepared to do if they didn't change.

Choices limited, Williams says

Until Tuesday's budget, provinces like Newfoundland and Labrador were given different choices under the complicated and constantly changing equalization formula, which exists to ensure a standard level of services are provided in all provinces and territories.

Until now, the program allowed provinces to pick different options each year and take the one that put them in the best financial position. Williams said the new budget removed that flexibility, and means a substantial drop in expected revenue.

Williams said the latest change uniquely affects Newfoundland and Labrador because of the way its two offshore accords interact with equalization. The first Atlantic Accord, negotiated in 1985, recognized the province as the principal beneficiary of the offshore oil industry. The second accord, completed in 2005 with Nova Scotia, addressed problems, including a clawback of equalization.

Williams believes the changes in Tuesday's budget documents are a direct retaliation for the ABC campaign — standing for "Anything but Conservative" — that Williams, a Progressive Conservative, successfully waged in his province leading up to October's general election. Voters in Newfoundland and Labrador shunned all Conservative candidates.

"It's a very clearly orchestrated campaign by the federal government to cause maximum damage to Newfoundland and Labrador," Williams said Tuesday night in a hastily arranged news conference.

"There obviously has to be a change of leadership.… We've seen this man betray [a] commitment before," said Williams, who launched the ABC campaign when Harper dropped written campaign promises from the 2006 election to continue to exclude offshore oil revenues from the equalization formula.

The change in equalization policy comes just weeks after Newfoundland and Labrador was told that it had become, a full year earlier than expected, a "have" province, in that it no longer qualified for equalization payments at all.

After the general election in October, Williams adopted a much more conciliatory tone with the federal Conservatives. Williams said the budget proves Harper cannot be trusted.