UPDATE 8-Canadian government falls, election set for May

* Opposition legislators bring down minority government

* Poll shows ruling Conservatives set to retain power

* Canada PM says election not needed, cites economy
(Adds Ekos poll result)

By Randall Palmer and David Ljunggren

OTTAWA, March 25 (Reuters) – The opposition toppled
Canada’s Conservative government on Friday, accusing it of
sleaze and mismanagement, and set the scene for a May election
that polls indicate the Conservatives will win.

Opposition legislators threw papers in the air in glee
after voting 156-145 in the House of Commons to defeat the
minority government, which they also say has mismanaged the
economy and is overly secretive.

The defeat paves the way for an election that will likely
be fought on two main themes — ethics and the economy. Likely
dates are May 2 or May 9.

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Canada’s dollar was steady at C$0.9810 to the U.S. dollar,
or $1.0194. Domestic stocks ignored the political news and
ended slightly higher on a rally in resource stocks.

Prime Minister Stephen Harper admitted he was disappointed
by the result, and said Canadians did not want what will be the
fourth general election in less than seven years.

“Our priority will remain to ensure stability and security
for Canadians in what remain extremely challenging global
circumstances,” he told reporters soon after the vote.

Harper said he would visit Governor General David Johnston,
the representative of Queen Elizabeth, Canada’s head of state,
on Saturday to seek the formal dissolution of Parliament and
set a date for the election.

The Conservatives, in power since 2006 with two successive
minority governments, are well ahead of the main opposition
Liberal Party in opinion polls. If the polls translate into
votes, Harper would once again get the most number of seats.

Only the Conservatives or the Liberals can realistically
win and both stress the need for fiscal austerity and the
importance of paying down Canada’s record budget deficit.

The opposition thinks it can benefit from a series of
ethical scandals to hit the Conservatives, who came to power
promising to clean up Ottawa. [ID:nN23241074]

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.

“There are only two alternatives here — more of this
disrespect for democracy, more of this contempt for the
Canadian people, or a compassionate, responsible Liberal
government,” said Liberal leader Michael Ignatieff, an academic
and broadcaster who has headed the party since 2008.

Harper says that if he does not win a majority in the
forthcoming election, the Liberals, the left-leaning New
Democrats and the separatist Bloc Quebecois are planning to
form an unstable coalition government.

The charge could dog Ignatieff, who has so far declined to
categorically rule out the idea.

“Any democratic politician … respects the verdict of the
people,” he said.

Pollster Ipsos Reid released a survey on Thursday showing
43 percent of voters back the Conservatives [ID:nN24181946] .

If that number holds, it could bring Harper and the
Conservatives their first majority in the 308-seat House of
Commons and secure a four-year term in office.

But an Ekos poll broadcast on Friday put the lead much
smaller, at seven points, which would mean the Conservatives would be shy of a majority of seats. [ID:nN25270133]

The Conservatives say an election is the last thing
Canadians need at a time when the economy is outshining those
of most industrialized nations but is still fragile as it
recovers from recession.

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

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.

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

UPDATE 8-Canadian government falls, election set for May