Canadian government falls, election set for May

OTTAWA (Reuters) - Opposition politicians drove Canada's Conservative government out of office on charges of sleaze and mismanagement on Friday, setting the scene for an early 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 say is tainted by sleaze, 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.

Canada's dollar was steady at C$0.9810 to the U.S. dollar, or $1.0194, against the U.S. currency after the vote.

Prime Minister Stephen Harper admitted he was disappointed by the result, saying 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 shortly 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 most likely dates are May 2 or May 9.

The Conservatives, in power since 2006 with two successive minority governments, are well ahead of the main opposition Liberal Party. Polls show Harper is set to hold on to power in an election and most likely strengthen his position.

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.

Despite the discouraging poll numbers, 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.

"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.

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.

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," said Ignatieff.

Pollster Ipsos Reid released a survey on Thursday showing 43 percent of voters back the Conservatives.

If that number holds, it is likely more than enough for Harper and the Conservatives to win their first majority in the 308-seat House of Commons and secure a four-year term in office.

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.