CANBERRA, March 19 (Reuters) - Australia's centre-left government faces upper house gridlock with Prime Minister Kevin Rudd wrestling a Senate dominated by conservative rivals, swing-vote Greens and two independents, now cast as kingmakers. A planned tax on alcoholic soft drinks was defeated this week when a pro-christian independent sided with the main opposition conservative bloc.
Parliament will hold a marathon debate and vote stretching into Friday over workplace rules -- a key issue in the last election -- with the government battling to have new laws passed.
Rudd's Labor needs conservative support, or the backing of all Greens and both independents, but opponents are threatening to block the employment laws and new laws setting up a carbon emissions trading scheme, both key Labor promises.
Here are some possible scenarios stemming from the parliamentary tussle on the way to the next elections, which are not due until late 2010:
AN EARLY ELECTION
Rudd can call an early election for both houses if any laws are rejected twice by the Senate. Some analysts and Greens interpret a lack of Labor negotiating interest as a sign Rudd is preparing to let key laws sink, thereby setting up early poll triggers.
Labor has a majority in the lower house, but does not in the Senate, which is what is thwarting Rudd's legislative agenda.
A vote this November -- a year early -- would allow Labor to pre-empt the worst of an expected recession and unemployment peaking at 7 percent in mid-2010, while still keeping his carbon trade timetable.
But an early vote is unlikely, regardless of the economic cloud over next year. Australia voters are cynical about early polls and typically punish sitting governments that choose this path. As well, the Greens would likely do well and the conservatives could lose at least five senators. Anti-gambling independent Nick Xenophon was so popular at the last election that he would likely draw enough votes next time to get a running mate into the Senate.
Rudd could face an even more unpredictable Senate after an early vote, albeit with a weakened conservative bloc.
GRIT TEETH AND COMPROMISE
Like Rudd, conservative Opposition Leader Malcolm Turnbull has little to gain if a frustrated Rudd runs early. His party is at war with itself over leadership and Turnbull's willingness to move on hardline employment laws favoured by former prime minister John Howard, and which in part led to Howard's defeat.
More likely is that Rudd, the conservatives and other players will be forced to compromise, despite Rudd's frustration at the prospect and protestations that his sweeping 2007 win handed Labor a mandate. Rudd's controlling personality and determination to steer nearly every aspect of policy will not help in this.
Labor is closer to conservative positions on its emissions trade plans, with government promises of a 5 percent emissions cut by 2020 far in arrears of Green demands for a 40 percent reduction. Turnbull wants the scheme delayed and extra business compensation.
But the Greens and independents may prove easier for Labor to work with on changes to employment laws, with the conservatives split over abandonment of a cherished Howard policy. Rudd and his deputy Julia Gillard will be hard at work courting minor players. And the Greens have already proven they can compromise.
LET THE LAWS GO
Last and least likely is that Rudd could let the laws go and see the centrepiece platforms of his election victory sink with them. Australians rejected Howard's conservatives amid widespread anger over the stripping back of employment rights. Rudd promised to reverse that. Labor also promised to deal with climate change through emissions trading, as large swathes of the country battled long-running drought.
If Labor lets these key planks go, Rudd would have to hope voters blamed intransient conservatives, or forgot their anger by the time of elections next November as economic woes overwhelmed their disappointment.
It is hard to see a notorious micro-manager, which Rudd is said to be by almost all who deal regularly with him, leaving any outcomes to chance, and he would be unlikely to simply shrug his shoulders and claim "I tried". Rudd's own staff and voters call him "Kevin 24/7", in recognition of his "Kevin07" election slogan and Olympian work ethic. Expect torrid nights of talks with opponents over the option of total surrender. (Editing by Bill Tarrant)
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