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Surprise winner returns Liberals to the battlefrontTHE CANADA REPORT

The Liberals have bypassed the ruling Conservative minority government as new leader Stephane Dion draws the battle lines for the next federal election.

Dion, from Quebec and the surprise winner of the leadership, heads the former government party that has a 4 percent lead in popularity over the Conservatives.

Since their defeat last winter, the Liberals have made some gains, and latest polls show they have the support of 35 percent of potential voters.

The Conservatives dropped to 31 percent, the New Democrats have 12 percent and the Green Party, 10 percent.

With an election expected next year, Dion said Canadians will have "two clear alternatives."

They can choose between Prime Minister Stephen Harper's "hard right" Conservatives and the socially progressive Liberals, he said.

The election will also be about leadership style, he said, calling Harper a control freak who muzzles his ministers against his own collegial dream team.

Top Mountie resigns

Canada's top Mountie, Commissioner Giuliano Zaccardelli, has resigned after admitting he got his facts wrong in the Maher Arar incident.

The issue concerned when Zaccardelli first learned that his force had supplied erroneous information to U.S. authorities and wrongly listed Arar, a Canadian, as an Islamic extremist with suspected terrorist ties.

Arar was then deported by the United States to his native Syria, where he was tortured for a year.

Zaccardelli told investigators in September that he knew a mistake had been made soon after Arar was deported, but now says he was not aware of this information.

News in brief

- Terrorists in Afghanistan have expanded their suicide attacks on Canadian military convoys, killing another two soldiers. The latest deaths were Chief Warrant Officer Bobby Girouard, 46, of Bathurst, New Brunswick, and Cpl. Albert Storm, 36, of Fort Erie, Ontario. There have been 44 Canadian soldiers killed in the conflict since 2002.

- The Canadian government voted against reconsidering the same-sex marriage law, blocking attempts to restore the traditional definition of the union. It's the second time the government has endorsed gay marriage. Legislation was enacted in 2005 legalizing same-sex unions.

- Ontario Auditor General Jim McCarter has found luxury sport utility vehicles, Caribbean vacations, leather jackets, chocolates and flowers among improper taxpayer-funded spending by child welfare, energy and education workers last year. For the first time, the report scrutinized spending by energy utilities, hospitals, school boards and the Children's Aid Society and uncovered millions in unaccounted expenses.

Facts and figures

There is continued strength in housing with the value of building permits surging to the second-highest level on record last month, up 6.1 percent.

Canada's dollar has weakened further to 86.99 cents U.S. while the U.S. dollar returns $1.1495 in Canadian funds before bank exchange fees.

The Bank of Canada decided to leave its key interest rate unchanged at 4.25 percent while the prime lending rate is 6 percent.

Stock markets are mixed, with the Toronto exchange index up at 12,880 points and the Canadian Venture Exchange lower at 2,810 points.

Lotto 6-49: (Wednesday) 2, 6, 12, 18, 22 and 29; bonus 4. (Dec. 2) 8, 32, 33, 43, 46 and 49; bonus 1.

Regional briefs

- Ed Stelmach, surprise winner in the race to succeed retired Alberta Premier Ralph Klein, takes office Friday. Stelmach won the Conservative leadership on the final ballot to become Alberta's 13th premier. He said he will carry on the work of Klein, including new initiatives to greatly expand cancer research.

- West Vancouver police Chief Scott Armstrong was fired from the force while Constable Lisa Alford was approved for a promotion despite a drunken driving conviction. Solicitor General John Les said he didn't know why Armstrong was fired but is confident people are getting good policing despite several other officers under investigation for inappropriate actions.

- Michael White was convicted in Winnipeg of second-degree murder in the stabbing death of his pregnant wife, Liana. A jury recommended that he serve at least 15 years in prison before being eligible for parole as he was remanded in custody to await a sentencing hearing.

- The premiers of Canada's four Atlantic provinces want the federal government to implement a revised equalization formula eliminating fiscal imbalances and to help attract more immigrants to the region. The equalization program is designed to help poorer provinces provide government services and programs to a national standard.

Jim Fox can be reached at