Canada opposition agrees to coalition outline

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By Randall Palmer and David Ljunggren

OTTAWA (Reuters) - Canada's three opposition parties have reached a tentative deal to defeat the minority Conservative government and then put together a coalition, a senior politician said on Monday.

The deal was struck late on Sunday at the end of three days of talks between the opposition Liberals and New Democrats, who insist the government must go because it has failed to tackle the effects of the global financial crisis.

"A very constructive, positive agreement has been reached between the Liberal Party of Canada and the New Democratic Party that will bring stimulus to the economy, which is badly needed," said former New Democrat leader Ed Broadbent, who took part in the talks.

"There are going to be a lot of jobs, a protection of pensions and I think we can look forward to a very constructive period," he told reporters, saying the deal included aid for the suffering auto and forestry sectors.

Media reports said the deal would let the government rule for 2-1/2 years. Broadbent did not address that point.

Parliament is due to hold a confidence vote on Dec 8 and if the government loses, the opposition parties are likely to get their chance to run the country.

Whether the proposed coalition could last anywhere near 2-1/2 years is in some doubt, since the Liberals and New Democrats would have to rely on the separatist Bloc Quebecois for support.

The chaos has knocked down the value of the Canadian dollar and there is potential for more uncertainty. The New Democrats, who favour a stronger government role in the economy, campaigned on a promise to roll back C$50 billion (27 billion pounds) in corporate tax cuts -- a stance the Liberals oppose.

The Conservatives, who won a strengthened minority in the October 14 election, say the Liberals and New Democrats are trying to subvert democracy.

"What this is all about is the opposition wanting to take power without an election. They don't want to earn the right to govern, they just want to take it," federal Transport Minister John Baird told CTV television on Monday.

The Liberals and New Democrats have a total of 114 seats in the 308-seat Parliament. The Conservatives have 143.

The opposition is also furious that Ottawa said last week it would scrap public financing for political parties.

Such a move would cripple the opposition parties, which rely much more on public financing than the Conservatives. The government withdrew the proposal on Saturday but the opposition say they can no longer trust Prime Minister Stephen Harper.

Media reports said the new government would have 24 ministers, of whom 18 would be Liberals and six New Democrats. The Liberals have governed Canada longer than any other party while the New Democrats have never been in power federally.

One potential sticking point is who would lead a coalition government. The Liberals have more parliamentary seats, so leader Stephane Dion would in theory be the leading candidate.

Dion, though, led the Liberals to such a bad defeat in the October 14 election that he will step down after the party chooses a new chief next May. A move to make him prime minister so soon after such a crushing loss is bound to be controversial.

Most Liberal legislators support ex-Harvard academic Michael Ignatieff, the front-runner in the leadership race, raising the prospect that they might try to force Dion to step down early. Under party rules Dion is not obliged to quit until the May leadership convention.

Bob Rae, the other main leadership contender, said he had held talks with Dion and Ignatieff on Sunday on the need to maintain party unity and discipline.

"The notion that somehow any internal issues in the party would be allowed to interfere with a successful transition to a new government, that notion is false," he told CTV.

(Reporting by Randall Palmer and David Ljunggren; editing by Peter Galloway)

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