Australia's landmark carbon trade scheme, being watched around the world in the lead up to global climate talks in December, hit a political roadblock on Thursday when parliament delayed a vote on the plan until August.
The decision by the upper house Senate scuttled government hopes of passing its carbon trade laws in this parliamentary session, prolonging uncertainty for major polluters and the stalled carbon trade market.
It also confuses Prime Minister Kevin Rudd's options for an early election if the Senate continues to frustrate his legislative agenda, and makes it unlikely he will call an early election this year despite his lead in opinion polls.
"It is clear the government wants this bill brought to a vote. We have been frustrated and prevented from doing that as a result of the games we have been seeing in the Senate this week," Climate Change Minister Penny Wong told reporters.
The carbon trade scheme, which will cover around 1,000 of Australia's biggest polluters, is the central plank of Rudd's plan to curb carbon emissions and fight global warming and was a key promise from his November 2007 election victory.
The government wants carbon trading to start in July 2011, forcing business to pay to pollute, and wants the scheme locked in before global talks in Copenhagen, which will consider a post Kyoto protocol framework to curb Greenhouse gas emissions.
The Senate will vote on the package of 11 bills on August 13, but is ultimately expected to reject the plan in its current form, with the government stuggling to find the extra seven votes it needs to push the laws through the upper house.
The conservative opposition wants to delay a final decision on the carbon trade scheme until after the Copenhagen talks, and until U.S. actions to fight climate change are known.
ELECTION TIMING
If laws are rejected or delayed twice by the Senate, with an interval of three months between votes, the government can call an early double-dissolution election to clear the political deadlock.
But Thursday's vote clouds Rudd's options. The soonest Rudd could have a legal trigger for an early double-dissolution election would now be late October, but only if legal advice finds Thursday's vote met the legal requirements of a delay.
If a vote to reject the bills August 13 is the first legal requirement for a double-dissolution, the government would have to wait until at least November 19 for its election trigger and Rudd would run out of time for an election in 2009.
Rudd has said he prefers to serve a full three-year term, with elections due in late 2010, but analysts have said he might want an election in early 2010 to avoid a vote later in the year when unemployment is expected to peak.
The carbon vote came after a fiery two weeks in parliament, with the government under prolonged attack over accusations Treasurer Wayne Swan gave preferential treatment to a Rudd friend and car-dealer who sought access to a government programme.
But Rudd has demanded opposition leader Malcolm Turnbull resign because his political attack was based on a Treasury email later found to be fake. A Treasury official has been questioned by police over the forged email.
Dennis Shanahan, political editor of the Australian newspaper, said the government was building a case for an early election to scare the opposition, which would prefer to fight an election on the issue of economic management in late 2010.
"It sounds like a prime minister with his foot on the throat of an opponent and a finger itching for an election trigger," Shanahan wrote on Thursday.
