Rudd may call election over carbon trading programme

Australian Prime Minister Kevin Rudd, whose government was elected in 2007 on a pro-green platform, may call an early election if Parliament fails to pass his carbon trading programme next week, according to a senior minister.

The government is currently negotiating possible changes to the carbon trading proposals with opposition members, who control the upper house of the Senate, the aim being to broker a deal over the weekend.

Such changes are likely to involve excluding agriculture from the scheme, although the conservative Liberal-National coalition in opposition is also pushing for coal mining, food processing and a range of other industries to be exempted too.

The Australian Parliament enters its final week before the long summer recess on Monday, which means that time is short. But if agreement can be reached, it should guarantee the extra seven votes required by the government to push the package through.

The Senate rejected the proposed legislation in August, but opposition leader Malcolm Turner has since put his leadership on the line by backing the initiative, dividing his party in the process.

Up to 30 of his 87 members of Parliament are threatening to defy him and vote against the scheme, prompting speculation that he may face a leadership challenge if the bill is defeated.

But business groups are calling for the issue to be settled as soon as possible as uncertainty over the future is making it difficult for firms to make investment decisions and to sign future deals, especially in the utilities sector.

If the legislation is passed, the carbon trading scheme would begin operating in July 2011 and cover 75 per cent of Australia’s carbon emissions. The goal is to cut such emissions by five per cent on 2000 levels by 2020.

Australia is currently the largest per capita polluter in the developed world because it uses fossil fuels, and particularly coal, for about 90 per cent of its electricity generation.