Two of the Liberal Party of Canada's highest-profile leaders decried the growing Senate expenses scandal while in Vancouver this weekend, but both Justin Trudeau and Stéphane Dion expressed caution about calls to reform or abolish the institution.

Party leader Trudeau said the controversy over a $90,000 cheque from Prime Minister Stephen Harper's top staffer to embattled Senator Mike Duffy is a sign of Harper's "ethical lapses." The scandal has led to audits and an RCMP investigation, but Trudeau dismissed criticisms of the upper house itself.

"Nobody, including myself, who has watched the goings-on in the Senate over the past year could possibly support the status quo," Trudeau said Sunday in Vancouver at the Federation of Canadian Municipalities meeting. "(But) major reforms like creating an elected Senate, or abolishing it outright, would require protracted constitutional discussions with the provinces.

"We would have a fruitless round of negotiations that would end in acrimony, and distract from the very real challenges our country faces."

Former party leader Stéphane Dion, who holds several Liberal shadow cabinet posts including democratic reform and intergovernmental affairs, was also in Vancouver, speaking at an electoral reform event Friday hosted by Vancouver-Quadra MP Joyce Murray, entitled "How to Fix Canada's Broken Electoral System?"

Dion sat down for an interview with The Tyee in the basement of a Vancouver pub, as hundreds of delegates arrived in the city for the annual conference of municipal leaders.

He echoed Trudeau's suspicions about changing the Senate, which is embroiled in a spiralling controversy some predict may only worsen when an audit of Senator Pamela Wallin's more than $300,000 travel expenses is released in several weeks.

"The debate today is not Senate reform," Dion told The Tyee, rejecting a long-time New Democrat and Conservative plank. "The debate is about Mr. Harper's honesty and judgment. Is he telling the truth to Canadians about what happened between Mr. Wright and Mr. Duffy? That's the issue.

"Thanks to the insistence of Liberals, we are now facing the (Supreme Court of Canada) because Mr. Harper wants to change the Senate without the agreement of the provinces, which is unconstitutional; I'm quite sure the court will confirm that."

Dion added that it is still too soon to say how the scandal will affect Canadian voters, cautioning that many facts remain to be discovered. But asked about the fallout if Harper, contrary to his assertions, knew about his chief of staff Nigel Wright's $90,000 gift to Duffy, Dion said it would be "a major crisis."

An Ipsos-Reid poll last week, published by CTV on May 30, found that only 13 per cent of Canadians believe Harper is being honest that he knew nothing of the payment. The poll also found that two-thirds of respondents viewed the Prime Minister's Office involvement a "serious ethical breach."

"It would be a major crisis, because Canadians will lose their confidence in the government," Dion told The Tyee. "But we are not there yet. I don't want to speak about what would happen.

"What we need now is to insist the prime minister make public what is happening -- how many emails he has about this issue? Can we see the cheque? These kinds of things. The prime minister must be very transparent on this issue, but he doesn't want to be; that's a major crisis, a major scandal."

Addressing reporters during the municipal leaders' meetings, Trudeau said his party would support boosting financial oversight for senators, who are appointed by the elected government, but can remain in office until 75. But focusing solely on monitoring expenses, he added, would not itself prevent abuses.

"Any amount of transparency and accountability you bring in still won't prevent the kinds of ethical lapses that our prime minister showed when he allowed his chief of staff to pay a sitting legislator to obstruct and avoid the negative outcomes of an audit," Trudeau said.

"We will be coming out shortly with a way to open up and be more transparent about all our expenses in a way that will restore Canadians' confidence and trust in holders of public office," he added. "We certainly will offer a level of transparency that hasn't been seen before."

Trudeau defended his remarks in Montreal's La Presse the previous weekend, when the Québec MP argued that, "We have 24 senators from Québec and there are just six from Alberta and six from British Columbia. That's to our advantage."

Facing a storm of opposition from western premiers, Trudeau stood by his observations. But with the re-elected BC Liberal government continuing to support electing the province's six seats, Premier Christy Clark maintained that the province is awaiting a Supreme Court ruling on the matter before proceeding.

"It's true British Columbians have long been troubled by an unelected Senate," Clark said in a May 28 statement. "But it should be fixed or folded and not a distraction… (the B.C. bill) will not be re-introduced until there is clarity from the Supreme Court... We need to remember the fact that B.C. and the West is dramatically under-represented in the unelected Senate."

The Tyee also asked Dion about his views on reforming Canada's electoral system more broadly, such as proposals for some type of proportional representation to replace the current first-past-the-post system.

Dion responded that the current "winner-takes-all" voting system is negatively "affecting the cohesion of the country," because voters for opposition parties cannot be confident they will be represented in Parliament. If the Liberals are elected in 2015, Dion hopes his party will launch a public review of reform options.

Dion's own preference, and that expressed by Trudeau during his successful leadership campaign, is for preferential balloting, in which voters rank their choices so that parties must appeal to second-choice voters. Parties, he argued, would have an "incentive" to cooperate and appeal to all voters, not just their base or using "wedge issues."

"We would change the political culture in Canada, and prepare parties to consider the possibility of governing together because they are trying to convince the same people," Dion said. It would also penalize parties who rely on attack ads on their opponents -- the type that Conservatives used to turn voters against him in 2008.

Such a ranked ballot system is in place in Australia as well as a number of European countries. But full-scale electoral reform, as proposed by the federal NDP, is out of the question, he insisted.

"I don't think we are ready now, as a party or as a country, to agree about another system," Dion told The Tyee. "But we may put this discussion on the table -- to have a blue-ribbon panel, a Royal Commission, a consultation of Canadians -- in order to discover a way to solve our problems without creating other problems. If we don't do it correctly, properly, we may end up with a worse electoral system than the one we have."

David P. Ball is a frequent contributor to The Tyee.