Stood-aside assistant treasurer Arthur Sinodinos has resigned from the ministry, paving the way for a reshuffle in which Tony Abbott can finally replace him and make broader changes to his frontbench team.

Sinodinos stood aside in March after he was called as a witness in the Independent Commission Against Corruption inquiry into the company Australian Water Holdings in which he served as a director.

In a statement Sinodinos said he had decided to resign because a high court case brought by Icac meant its report would not be brought down until March. Waiting for its finding – which he believed would show he had done nothing wrong – would leave the government without an assistant treasurer in the lead-up to next year’s budget, he said.

Sinodinos also took a swipe at leaks from within the government about his decision, and made it clear it was the prime minister’s position rather than his own view that he could not resume ministerial duties until the Icac findings were brought down.

“I can confirm that I have been confidentially discussing my ministerial future with the prime minister and Brian Loughnane, the party director, in recent weeks,” he said.

“It had ... been agreed that I would resign today via an exchange of letters with an announcement being made on Sunday. I am disappointed by the reports in today’s newspapers that pre-empt this. Speculation on such an important matter does not assist the orderly workings of government.”

Tony Abbott said he would announce Sinodinos’s replacement “in the next few days”.

He said Sinodinos had provided “sterling service” and he was confident he would be vindicated.

Sinodinos, a long-serving chief of staff to former prime minister John Howard, said as a backbencher he could “now speak more freely... and ... be a more effective advocate for the government and the people of NSW”.

Speculation around a reshuffle centres on the future of the defence minister, David Johnston, who some see as an underperformer. His comments that the Adelaide-based Australian Submarine Corporation “could not build a canoe” contributed to the Coalition’s defeat in the byelection for the South Australian seat of Fisher, which gave Labor the numbers to rule in its own right.



Johnston has also been the subject of serious internal leaks in recent weeks, including that he and a senior staffer had spent $6,300 on food and drink with foreign officials and industry representatives, even as defence personnel learned they would be suffering a sub-inflation pay rise of 1.5% for the next three years.

But Johnston is also close to fellow West Australian Julie Bishop, who has recently challenged decisions of the powerful prime minister’s office.

Views within the Coalition were mixed as to whether Abbott would simply replace Sinodinos with a parliamentary secretary such as Victorian Josh Frydenberg or opt for a for a wider shake-up of his frontbench team as he seeks to revive his government’s fortunes.

A reshuffle could also mean the promotion to cabinet of female ministers such as Sussan Ley or Michaelia Cash, or other strong performers such as assistant transport minister Jamie Briggs.

In his statement Sinodinos said: “I stood aside from my role as assistant treasurer prior to giving evidence so that there was no unnecessary distraction to the important work of the government which I am proud to serve. While I am extremely disappointed by this further delay, I am confident that when the reports are finally released, I will not be subject to any finding of corrupt conduct or illegality.

“The government needs a full-time Assistant Treasurer for the preparation of next year’s budget. On that point the Prime Minister and I agree. The Prime Minister has advised me that I cannot resume ministerial duties until the Icac matters are completed and reported upon.”