22 Jun 2009

Tough week ahead for Australian PM

8:35 pm on 22 June 2009

Australia's Prime Minister Kevin Rudd is facing his biggest political crisis over the coming week with rivals demanding he resign over abuse of power accusations and parliament to reject a key election promise.

Mr Rudd said on Monday that his centre-left government had been targeted in a "farrago of lies" mounted by conservative opponents, who accused the Prime Minister and Treasurer Wayne Swan of doing favours for a car dealer friend who was also a political donor.

Australian media have dubbed the affair "Utegate", as the dealer in question, John Grant, had lent Mr Rudd a "ute" - a two-seater pick-up truck - for use in his constituency.

Opposition politicians believe Mr Rudd tried to help Mr Grant secure money from a Treasury fund called OzCar to help his business cope with the global economic slump.

An email detailed in weekend newspapers appeared to back accusations that both Mr Rudd and Mr Swan misled parliament over government favours done for Mr Grant.

"The problem is, no such email exists. It is false, it is fake, it is a forgery, notwithstanding the fact that that is the single piece of evidence," Mr Rudd said, demanding Liberal Party leader Malcolm Turnbull resign or apologise.

As Mr Turnbull called for both Mr Rudd and Mr Swan to quit, police raided the home of a Treasury department official as part of an inquiry into whether an email had been deliberately forged.

The email appeared to have been "concocted", but raised serious questions, conservative spokesman Joe Hockey told a special parliamentary session called to deal with the crisis.

Heat on over climate

An even bigger problem looms for Mr Rudd in the upper-house Senate, with a balance-of-power alliance of conservative and swing-vote senators pledging to reject Labor's promise of a carbon trade regime to help green the emissions-heavy economy.

"It is absolutely crazy for Australia to go it alone," said independent Senator Steve Fielding, who said Labor's vaunted laws should be put aside until the completion of global climate talks in Copenhagen in December.

"You've got China, you've got India. We've got to wait till Copenhagen. We need to see what the rest of the world are going to do, and then Australia can respond, because frankly, going alone is suicide," Mr Fielding said.

With Labor needing seven votes to get laws through the Senate and conservatives promising a filibuster to avoid a vote, Mr Fielding's refusal meant the carbon regime faced certain defeat.