Canada government set for defeat on sleaze, waste

Fri Mar 25, 2011 12:05am EDT

* Polls show ruling Conservatives would retain power
* Canada PM says election would threaten economy

By David Ljunggren

OTTAWA, March 25 (Reuters) - Canada's minority Conservative government looks set to fall on Friday over charges of waste and sleaze, bringing a May election that Prime Minister Stephen Harper says could hurt one of the best-performing industrialized economies.

The three opposition parties, with a majority of seats in the House of Commons, say they will back a nonconfidence motion at 1:30 p.m. Eastern (1730), launching Canada into its fourth election in less than seven years.

Only two parties can realistically win the election -- the Conservatives or the main opposition Liberals -- and both stress the need for fiscal austerity and the importance of paying down Canada's record budget deficit.

The Liberals vow to scrap C$6 billion ($6.1 billion) in corporate tax cuts and end what they say are extravagant multibillion-dollar plans to buy new fighter jets and build prison cells.

The opposition parties also said this week they would reject the federal budget, a move that would also bring down the government should Friday's motion fail. [ID:nN22192715]

Harper, highlighting risks to the economic recovery, says his opponents are treating the economy as "a political game." [ID:nTOR007972]

Canada's budget deficit hit a record C$55.6 billion last year, but that's tiny compared to a projected $1.645 trillion U.S. shortfall in 2011. The Canadian jobless rate is 7.8 percent compared with 8.9 percent south of the border.

Although polls show the Conservatives would retain power -- likely with another minority -- the opposition thinks it can benefit from a series of ethical scandals to hit the Conservative Party, which came to power in 2006 promising to clean up Ottawa. [ID:nN23241074]

"Will the prime minister now admit he is just a defrocked televangelist of accountability?" Liberal legislator Gerard Kennedy asked in Parliament on Thursday.

Police are investigating allegations of misconduct by a former Harper aide, and last month, four Conservative officials were charged with violating election financing rules in 2006.

This week, a parliamentary committee slapped the government with the first contempt ruling in Canada's history, saying the Conservatives had hidden the full costs of a spending program from Parliament. [ID:nN21299652]

The Conservatives have responded with charges the Liberals, the left-leaning New Democrats and the separatist Bloc Quebecois are planning to form a coalition government.

"The Liberal Party is showing outrageous contempt for Canadian voters by saying that it does not matter which government they elect. It will form a coalition ... and make reckless decisions," government House Leader John Baird told legislators on Thursday.

($1=$0.98 Canadian) (Reporting by David Ljunggren; editing by Rob Wilson)