Canada government set for defeat on sleaze, waste

* 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)

Canada government set for defeat on sleaze, waste