Bonds News

UPDATE 2-Canada election call all but certain next week

OTTAWA, Aug 29 (Reuters) - Prime Minister Stephen Harper seemed almost certain on Friday to call a general election next week to decide who will guide Canada through a rough economic patch, and an aide pointed to Oct.14 as a likely date.

The Conservative leader, who has headed one of the longest minority governments in Canadian history, sees Sept. 2-7 as the most likely window to call for a vote, the aide said.

Harper is formally asking whether any of the three opposition parties will cooperate with him through the autumn, but his party has already booked a campaign plane, launched television ads and outlined its broad themes.

“I think his plan is made. He wants an election. Period,” Gilles Duceppe, leader of the separatist opposition Bloc Quebecois, told reporters after meeting Harper.

Harper, whose government won power in January 2006, will meet Jack Layton, leader of the leftist New Democratic Party, on Saturday though Layton has called the exercise a charade.

Liberal leader Stephane Dion has said he is available to meet only on Sept. 9.

The prime minister did not, under such circumstances, feel obliged to wait for a meeting with Dion to call an election, said the official, who did not want to be identified.

Harper’s government needs the support of at least one opposition party to get bills passed, and he has complained about legislation being stalled in the Liberal-dominated Senate and obstructed in the House of Commons, principally by Dion.

Some pundits have suggested that Harper might want to get the Canadian vote out of the way before the U.S. presidential election, to avoid the possibility that a victory by Democrat Barack Obama might have coattail effects for Dion.


If an election were called, Harper will campaign on providing certainty versus what he calls Dion’s risky approach, particularly after the economy barely skirted two quarters of contraction -- the common definition of a recession.

Data released on Friday showed the economy grew just 0.3 percent on an annualized basis in the second quarter after shrinking 0.8 percent in the first quarter as demand waned for Canadian exports such as autos, forest products and machinery.

Not surprisingly, Dion laid the blame on the Conservatives for the weak economic numbers.

“Every time Canada is governed by a Conservative government, the economy stalls, jobs are lost and deficits loom,” Dion said in a statement.

The Conservatives are targeting Dion’s spending promises and his planned carbon tax, which he promises to offset with income tax cuts and support for the poor.

Harper won’t promise large tax cuts or make big spending commitments in the upcoming campaign and he offers more certainty on national unity and on the world stage, the aide said.

As of now, the most likely result is another minority government with the governing party still uncertain.

The prime minister said this week he recognized that the opinion polls were not particularly supportive for the Conservatives, but added that a poll was needed because Parliament was at an impasse.

His party’s precarious hold on power was underlined on Friday when a Nanos poll showed the Liberals leading the Conservatives by 35 percent to 33 percent, with 17 percent support for the New Democrats.

However, Harper far outscored Dion -- by 36 percent to 15 percent -- on who voters thought would make the best prime minister. Seventeen percent picked the NDP’s Layton.

“A potential election poses risks for both the Conservatives and the Liberals,” pollster Nik Nanos said in a commentary on the poll.

“Prime Minister Harper seems ready to risk his mandate while his party is tied with the Liberals. Liberal leader Stephane Dion has not been embraced by Canadians.”

Reporting by Randall Palmer; Editing by Ted Kerr