By James Grubel CANBERRA, Nov 13 (Reuters) - Australian Prime Minister Kevin Rudd marks two years in office this month with his centrepiece carbon trade plan in jeopardy, parliament facing a log-jam of bills and government support slipping over asylum seekers. Parliament resumes on Monday for this year's hectic final two weeks that could change Australia's political outlook, giving clues to whether Rudd will want an early election in 2010 and exposing the deep divisions within an opposition struggling for poll support. Laws for carbon trading and plans to split phone company Telstra Corp. <TLS.AX>, which are weighing on Telstra's share price, will be decided in the upper house Senate in the final sitting from Nov. 23, with little sign they will pass. Rudd may need to water down his carbon-trade plan or offer more compensation to industry in order to push through his carbon trading laws, or risk extending business uncertainty over the scheme which will cover 1,000 of Australia's biggest polluters. But rising interest rates as the economy rebounds from the global downturn, and a new wave of asylum seekers arriving by boat, risk undermining Rudd's poll standing and may prompt thoughts of an early election. The carbon-trade laws were defeated a first time in August but Rudd wants the plan passed before December's global climate talks in Copenhagen. A second defeat would give Rudd the right to call an early election, although he has played down that option. "It's not the election Rudd wants," political analyst Nick Economou, from Monash University, told Reuters. "He wants an agreement on emissions trading so he can go to Copenhagen and parade himself as one world leader who has got a deal." Veteran political analyst Rob Chalmers, however, believes Rudd is less interested in carbon trading and more interested in the option of an early election so he can keep the political pressure on the opposition. "Rudd wants to keep open the option of a double dissolution election and base his campaign on asserting the opposition does not want to do anything to counter global warming," Chalmers said in his latest Inside Canberra political newsletter. RUDD STRONG, OPPOSITION DIVIDED Rudd won power on Nov. 24, 2007, with a central promise to ratify the Kyoto Protocol on climate change and introduce a sweeping carbon-trade system to help curb carbon emissions. The scheme is due to start in July 2011, and the government is negotiating possible amendments with the opposition in the hope of finding seven extra Senate votes needed to pass the package of bills. The government has 22 bills before parliament, including the package of 11 carbon-trade bills, which have already been rejected once by a hostile Senate. But none have yet qualified as election triggers by being rejected or delayed twice. Despite problems pushing his agenda through the Senate, Rudd remains dominant in opinion polls, which suggest he would easily win a second term with an enlarged majority. Opposition leader Malcolm Turnbull desperately wants to avoid an early election and has put his leadership on the line over his wish to forge a deal on carbon trading. But several member's of Turnbull's Liberal Party, and the junior opposition partner the National Party, plan to defy their leader if any deal is struck on carbon trading. That would further undermine Turnbull's leadership. Economou said Turnbull's standing would suffer with or without a deal on the carbon trade laws. An agreement would open divisions within the opposition, while the rejection of a deal would expose Turnbull's lack of authority. "The Liberals and the Nationals are causing themselves huge damage," Economou said. "What you've got is an opposition that is deeply ideologically divided." Bookmakers Centrebet say the odds Turnbull will hold onto the leadership have tightened in recent weeks, to $2.13 from $2.30 for a $1 bet, although Turnbull's treasury spokesman Joe Hockey was still favourite, at $1.95, to take over before an election. (For scenarios on an early election in Australia, click on [ID:nSYD537492] (For more on the carbon trade debate in Australia and New Zealand click on [ID:nCARBONAU]. For a factbox on the scheme, click on [ID:nSYD493757].) (Editing by Michael Perry and Jerry Norton)
