Harper Seeks to Move Past Expense Scandal Amid Poll Slump

Canadian Prime Minister Stephen Harper signaled he won’t be distracted from his economic agenda as he tries to dig his government out of a scandal that has dropped his poll ratings to the lowest since he took power.

Harper used a weekend policy convention in Calgary to rally his Conservative Party’s base, listing in a keynote speech his government’s record of achievements on matters such as economic management and crime prevention. He reiterated plans to balance the nation’s finances, develop its natural resources and lower phone and cable costs for consumers.

“We have a strategy, we are focused and our plan is working,” Harper told party supporters.

The government has been dogged this year by an expenses scandal implicating four senators, including three Conservatives that Harper appointed. Most damaging have been revelations that his former chief of staff, Nigel Wright, helped one senator repay disputed expense claims. The controversy has dominated parliamentary debate as opposition parties accuse the government of a cover-up, erasing a lead in opinion polls the Conservatives have held for most of the past eight years.

Harper, who has denied knowledge of the payment, tried to distance the Conservatives from the issue in his speech.

“Ours is not the party of entitlement, not guided by power or privilege,” he said in a 40-minute address. “We didn’t go to Ottawa to join private clubs or become part of some elite.”

Conservative Support

Support for the Conservatives, formed in 2003 as part of a merger between two right-of-center parties, peaked during the 2011 election campaign that saw them win a majority of seats in Parliament with 40 percent of the popular vote. Most polls now put them at just under 30 percent, the lowest since they first came to power in 2006.

According to poll aggregator threehundeight.com, the Conservatives have averaged support of 29.1 percent in surveys taken since the end of August, compared with 35.7 percent for the Liberals and 24 percent for the main opposition New Democratic party. At the end of last year, the Conservatives led with 35 percent, compared with 29 percent for the NDP and 23 percent for the Liberals.

Those numbers suggest the party’s base, pegged at about 30 percent, remains supportive even as support for Harper has suffered among non-partisan voters, said Nik Nanos, an Ottawa-based pollster, in a telephone interview.

While “the senate stuff has had a significant psychological impact,” Nanos said, “from a polling perspective, the Conservative core is still with them so far.”

Undermining Message

The scandal has been undermining Harper’s efforts to keep public attention on economic issues such as the trade agreement in principle with the European Union announced last month. Parliament re-opened last month with a so-called Throne Speech that laid out the government’s platform, listing jobs and the economy as priorities.

Canada’s economy has struggled to build momentum this year, with average annualized quarterly growth rates of 1.3 percent since the start of 2012, down from 3 percent in 2010 and 2011, Statistics Canada data show. The economy has added just 113,100 jobs so far this year, on pace for its second worst annual result in the past decade, while the labor force participation rate fell to the lowest in more than 10 years.

To be sure, there are signs Canada’s economy is strengthening, with data released by Statistics Canada Oct. 31. pointing to the fastest quarterly expansion in two years. Canadian consumer confidence rose at the end of last month for the first time in five weeks, according to the Bloomberg Nanos Canadian Confidence Index.

Economic Agenda

Harper’s agenda includes plans to balance the budget by 2015, freeze federal government operating spending and introduce legislation that would require balanced budgets in the future. Harper also plans steps to force cable television providers to give more options to clients in selecting channels and to encourage wireless firms to lower domestic roaming fees.

The Throne Speech came after Harper’s government tussled with the country’s largest telecommunications providers: Montreal-based BCE Inc., Rogers Communications Inc. of Toronto and Telus Corp. of Vancouver. The government has limited their ability to expand and sought to open the market to foreign competition. All three company’s share prices are down from highs set earlier this year.

Expense Claims

Harper’s political troubles intensified earlier this year with reports that some senators were claiming expenses they weren’t eligible for. The controversy escalated after it was disclosed that Wright wrote a C$90,000 ($86,400) personal check to Conservative Mike Duffy to help him reimburse the Senate.

Wright, a former managing director at Toronto-based private-equity firm Onex Corp., was forced to resign. Two other Conservative senators, Pamela Wallin and Patrick Brazeau, have also left Harper’s caucus amid investigation of their expenses.

The Royal Canadian Mounted Police allege that Wallin may have committed criminal breach of trust and fraud by filing ineligible expenses, according to court documents obtained by Bloomberg News.

The Senate, an unelected legislative body with lawmakers appointed by the prime minister, has been debating a motion by senate Conservative leader Claude Carignan to strip the three of their salaries and office allowances. A vote on the motion could come early this week.

“The Senate should do the right thing now, and suspend those senators without pay,” Harper said in the Calgary speech, referring to Duffy, Wallin and Brazeau.

Produced Documents

Duffy, a former journalist who covered Canadian politics for four decades before being appointed to the Senate, denied he made improper claims and accused the government of fabricating what he calls a “scheme.” Last week, Duffy produced documents showing the Conservative Party paid for his legal fees relating to the repayment of expenses.

While Harper has said he didn’t know Wright gave Duffy the funds, opposition parties have been riddling the prime minister with questions about what he knew about the transaction, seeking to expose contradictions in his story.

After initially saying he accepted Wright’s resignation, Harper said last week that his former chief of staff was fired. He also said that only a “very few” people in his office were aware of the plan, after earlier insisting that Wright acted alone.

A poll released by Nanos Research on Nov. 1 found only 21 percent of Canadians are satisfied with Harper’s explanation.

Although Conservatives have fallen in public opinion polls since the scandal broke, Harper continues to have an edge on economic issues, surveys show.

Eric Sykes, a Conservative convention delegate from British Columbia, said he’s worried the scandal is distracting from the government’s solid economic record and achievements such as the EU trade pact.

“The Senate is a serious situation -- we’re bleeding because of that,” said Sykes, a former production manager for an aluminum producer. “But it’s a peanut in terms of the Canadian economy.”

Before it's here, it's on the Bloomberg Terminal.