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My Profile Top News Reuters top ten news stories delivered to your inbox each day. Subscribe You are here: Home > News > International > Article Home Business & Finance News U.S. Politics International Technology Entertainment Sports Lifestyle Oddly Enough Health Science Special Coverage Video Pictures Your View The Great Debate Blogs Weather Reader Feedback Do More With Reuters RSS Widgets Mobile Podcasts Newsletters Your View Make Reuters My Homepage Partner Services CareerBuilder Affiliate Network Professional Products Support (Customer Zone) Reuters Media Financial Products About Thomson Reuters Australia PM Rudd faces toughest week Mon Jun 22, 2009 1:11am EDT Email | Print | Share | Reprints | Single Page [-] Text [+] By Rob Taylor CANBERRA (Reuters) - 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. Rudd said on Monday that his center-left government had been targeted in a "farrago of lies" mounted by conservative opponents, who accused Rudd and Treasurer Wayne Swan of doing favors for a car dealer friend who was also a political donor. An email detailed in weekend newspapers appeared to back accusations that both Rudd and Swan misled parliament over government favors done for the car dealer to help him gain finance amid the global credit crunch. "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," Rudd said, demanding conservative opposition leader Malcolm Turnbull resign or apologize. As Turnbull called for both Rudd and 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. The furor, while unlikely to force resignations, threatens to dent Rudd's stellar popularity and claims of clean government, with an instant television poll showing 75 percent of respondents doubted Rudd and Labor's version of events. Despite coverage blanketing newspapers and television, the markets took no notice with few traders expecting either Rudd or Swan to fall victim to the crisis. HEAT ON OVER CLIMATE But an even bigger problem loomed for 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," Fielding said. With Labor needing seven votes to get laws through the Senate and conservatives promising a filibuster to avoid a vote, Fielding's refusal meant the carbon regime faced certain defeat. The only bright for Rudd was a conservative backflip on a revived budget bill on taxes on alcoholic soft drinks, which if defeated would have given Rudd a constitutional trigger to call early elections. Opposition spokesman Peter Dutton said his side would reluctantly support the tax, which had already been rejected once by the Senate. A second rejection would have allowed Rudd to call a "double dissolution" election in both houses of parliament. (Editing by Jeremy Laurence) © Thomson Reuters 2009 All rights reserved Share: Del.icio.us Digg Mixx Yahoo! Facebook LinkedIn Next Article: Australia PM Rudd faces toughest week Iran's presidential election Aftermath of Iran's election Up-to-the-minute news, photos and video of the aftermath of President Mahmoud Ahmadinejad's disputed election in Iran. Full Coverage More International News Iran's Mousavi defiantly urges more protests | Video Bomb seriously hurts head of Russia's Ingushetia region Death toll from Iraq's Kirkuk blast rises to 73 | Video Suicide bomber kills three Afghan soldiers Pakistani aircraft hit militants near Afghan border More International News... Editor's Choice Slideshow A selection of our best photos from the past 24 hours. Slideshow Most Popular on Reuters Articles Video Q+A: What might happen with monitored North Korean ship? 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