June 24 (Bloomberg) -- Australia’s Labor government called on opposition leader Malcolm Turnbull to reveal his sources at the center of allegations the prime minister used his influence to grant special favors to a Queensland car dealer.

“Mr. Turnbull needs to front up and explain his role in this whole tawdry affair,” Finance Minister Lindsay Tanner told Australian Broadcasting Corp. radio today, saying the government had no power to force Turnbull to release the information. “He needs to explain himself.”

The government is pressing Turnbull after he failed yesterday to substantiate his claim that Prime Minister Kevin Rudd lied to parliament over an e-mail seeking preferential treatment for a car dealer friend. Australian police declared the e-mail at the center of Turnbull’s accusations a fake, prompting calls for him to quit.

Turnbull is also facing a revolt within his own party. Four coalition lawmakers defied his policy to support a government plan increasing taxes on certain alcoholic beverages. Fifteen lawmakers also don’t approve of the coalition’s position on asylum seekers, the Sydney Morning Herald reported today.

“This throws doubt over Turnbull’s judgment, but his leadership will limp on largely because there are no alternatives in the party,” said Carol Johnson, a professor and political analyst at Adelaide University. “It’s possible he could be considered unlucky and that he over-reached on this matter. It really depends what happens during the police investigation.”

Political Focus

“Utegate,” as the affair has been dubbed in reference to a utility vehicle that Brisbane car dealer John Grant lent Rudd during the 2007 election campaign, has dominated the nation’s politics over the past five days. Turnbull, 54, has traded blows with Rudd, 51, and Treasurer Wayne Swan, 54, all week over whether they gave Grant preferential treatment for access to the A$2 billion ($1.6 billion) Ozcar fund, a plan set up by the government to help car dealers.

Treasury official Godwin Grech last week testified before a parliamentary inquiry that Rudd’s office contacted his office on behalf of Grant, Rudd’s friend and neighbor. Grech, head of the OzCar program, told a Senate inquiry on June 19 that while his memory could be faulty, he recalled a short e-mail alerting him to Grant’s case.

Media outlets, including the Australian Broadcasting Corp., have reported that police searched Grech’s house in relation to the e-mail. Neither the Treasury nor Grech will comment on the report or police search, department spokesman Tony Murray said.

Judicial Inquiry

Turnbull called for a judicial inquiry to examine the fund, the appearance of treasury officials before the Senate committee on June 19 and communication between the offices of government ministers, departments and Grant. That motion was lost in a vote in the government-controlled House of Representatives.

Opposition Treasury spokesman Joe Hockey said the parties wouldn’t reveal its sources and would co-operate with an Australian Federal Police investigation into the e-mail, purportedly from Rudd economic adviser Andrew Charlton to the Treasury Department. Police later found the e-mail to be a fake after searching a Canberra house and Treasury Department.

Grech was a member of Hockey’s ministerial staff before the coalition lost office in 2007.

“We are not going to go down the path where we compromise our ability to ask questions of this government,” Hockey told ABC radio today. “There is a political story which is of interest to some if not many, about Godwin Grech, but the police will do their job.”

A senate committee will investigate allegations Grech has been threatened and intimidated, Senate President John Hogg said in a statement.

To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net

Last Updated: June 23, 2009 21:33 EDT