Australia PM leaves open option of poll on carbon

CANBERRA (Reuters) - Australian Prime Minister Kevin Rudd said on Thursday his government should serve out its three-year term but would not rule out calling an early election to end a political deadlock over climate-change policy.

"What I've said all along is that I believe governments should serve their full term," Rudd said in his first public appearance after parliament on Wednesday rejected for a second time one of his key policies, cutting carbon emissions.

He did not dismiss the option of an early poll, which would be fought over the government's "cap and trade" scheme aiming to limit the amount of heat-trapping greenhouse gases that polluting firms pump into the air, as well as economic stimulus spending.

Both issues could unsettle voters and businesses concerned about the emissions scheme's costs.

Australia is the rich world's biggest greenhouse-gas polluter per capita and is prone to water shortages, droughts and devastating bushfires.

Opinion polls show most Australians support action over climate change, but are wary of electricity and fuel cost hikes that emissions trade would bring, despite scientists warning the country is experiencing an accelerated pace of climate warming.

Parliament's second rejection gives Rudd a constitutional trigger to call an early election to resolve the deadlock, but he has promised to re-introduce the legislation into parliament again in February.

Rudd told reporters he hoped that "over this long summer that cooler heads, calmer heads, more responsible heads in the (main opposition) Liberal party may prevail." Australia's summer runs from December to February.

The opposition is split between climate-change skeptics and those who favor some sort of action to cut emissions. Critics of Rudd's scheme say it effectively imposes a huge tax on industry, leading to higher prices, but will have little impact on global carbon emissions.

If Rudd won fresh elections, the government could ram a new package of emissions laws more acceptable to industry and voters through a special joint sitting of both houses of Parliament.

Australia's next general election is not due until late 2010. Analysts and lawmakers are split over whether Rudd would opt to go to the ballot box as early as March, or wait until later in the year when he could possibly have a new package of emissions laws to trumpet to voters.

"If Prime Minister Kevin Rudd wanted (an early election) on the revised legislation, he would have to wait until as late as September, which would be only a couple of months short of a full three-year term," senior Political Editor Michelle Grattan wrote in The Age newspaper on Thursday.

Australia's weather bureau is forecasting a hotter than normal summer over much of the country, partly due to a developing El Nino weather pattern and predictions the coming summer months could be the warmest on record.

An El Nino, which means "little boy" in Spanish, is driven by unusually high ocean warming in the eastern Pacific, unleashing chaotic weather patterns across the Asia-Pacific region, including severe drought in some areas and storms in others.

(Editing by Bill Tarrant )