Canada government set for defeat on sleaze, waste

OTTAWA (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 (5:30 p.m. British time), 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 (3.8 billion pounds) 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.

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

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.

"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.

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)