Tony Abbott has wound back the ministerial code of conduct to allow federal ministers to keep shares in public companies they would have been forced to sell under the Gillard and Rudd governments.

The code outlines rules and procedures ministers must follow to avoid conflicts of interest. The new standards leave it open for ministers to hold shares in public companies that do not relate to their portfolios, at odds with the standards set out by the previous government.

Under the code of conduct created by the Gillard government, ministers were required to get rid of all public and private shareholdings other than some forms of managed funds.

“In recognition of the collective responsibility that ministers bear in relation to cabinet decisions, these standards require that ministers divest themselves of investments and other interests in any public or private company or business, other than public superannuation funds or publicly listed managed funds or trust arrangements,” the 2010 guidelines read.

This language is removed from Abbott’s code, and is replaced by the phrase: “In recognition of the responsibilities that ministers bear, these standards require that ministers make arrangements to avoid conflicts of interests arising from their investments.”

Ministers are still required to resolve any conflicts if the company operates in an area affected by their portfolio.

The prime minister’s office has not responded to questions about the changes to the code of conduct.

Peter Timmins, a freedom of information consultant, says the Abbott government needs to address some concerns about the way it is approaching governing.

“There are a range of issues that have surfaced since the election that suggest transparency and accountability really don't seem to be at the centre of the Abbott government.”

Under the previous government, the only potential course of action if a conflict of interest arose was the liquidation of shareholdings. But a new provision in the code gives ministers who want to keep their shares the option to refer decisions in which a conflict arises to a senior minister nominated by the prime minister.

“The minister shall make appropriate arrangements to ensure that any conflict of interest is avoided. Those arrangements may include referral of the decision-making responsibility is passed to the senior minister or a minister nominated by the prime minister.”

The new code retains the ban on directorships of public and private companies but allows ministers to keep directorships in some private companies they own.

“Where the minister is the director of a private company and the assets of the private company are beneficially owned (in whole or in part) by the minister then the directorship will not be considered to constitute a conflict of interest where, were the assets to be owned directly by the minister, that fact would not constitute a conflict of interest.”

The Howard government was the first to introduce a code of ministerial standards in 1996, and the Abbott government’s code appear to be similar to this one.

“Ministers are required to divest themselves, or relinquish control, of all shares and similar interests in any company or business involved in the area of their portfolio responsibilities,” the Howard government’s 1998 guidelines read.

The Abbott, Gillard and Howard governments’ codes of conduct for ministers on shareholdings

Abbott code

2.11. In recognition of the responsibilities that Ministers bear, these Standards require that Ministers make arrangements to avoid conflicts of interests arising from their investments.

2.12. Where the Minister is a shareholder of a private company and the assets of the private company are beneficially owned (in whole or in part) by the Minister then the shareholding will not be considered to constitute a conflict of interest where, were the assets to be owned directly by the Minister, that fact would not constitute a conflict of interest. Ministers may hold public superannuation funds or publically listed managed funds or trust arrangements where:

(i) the investments are broadly diversified and the Minister has no influence over investment decisions of the fund or trust; and

(ii) the fund or trust does not invest to a significant extent in a business sector that could give rise to a conflict of interest with the Minister’s public duty.

2.13. If an enterprise in which a Minister has a shareholding (see paragraph 2.12 above) subsequently begins to operate in an area potentially affected by decisions which are likely to be made by the Minister it is the responsibility of the Minister concerned to declare any conflict of interests involved and to resolve the matter immediately to the satisfaction of the Prime Minister on the advice of the Secretary of the Department of the Prime Minister and Cabinet.

2.14. Where a situation arises of the kind referred to in paragraph 2.13, the Minister shall make appropriate arrangements to ensure that any conflict of interest is avoided. Those arrangements may include:

(i) referral of the decision making responsibility is passed to the senior Minister or a Minister nominated by the Prime Minister;

(ii) divestment of the shareholding;

(iii) establishment of a Blind Trust; or

(iv) such other arrangement which to the satisfaction of the Prime Minister, on the advice of the Secretary of the Department of the Prime Minister and Cabinet, avoids the possibility of a conflict of interest.

2.15. For the purposes of paragraph 2.14 a Blind Trust will require appropriate legal and accounting certification. In cases where a reasonable apprehension of a conflict of interest arises based on the initial composition of the assets held by the trust, a Minister must:

(i) declare any interests to the Cabinet and to the Prime Minister as necessary; and

(ii) absent themselves from Cabinet consideration or make arrangements for decision‑making to be passed to another Minister selected by the Prime Minister.

2.16. If, for instance, a Minister is required by these Standards to dispose of an interest, the simple transfer of the interest to a family member via a nominee or private trust under their control is not an acceptable form of divestment.

Gillard code

2.9. In recognition of the collective responsibility that Ministers bear in relation to Cabinet decisions, these Standards require that Ministers divest themselves of investments and other interests in any public or private company or business, other than public superannuation funds or publicly listed managed funds or trust arrangements where:

• the investments are broadly diversified and the Minister has no influence over investment decisions of the fund or trust; and

• the fund or trust does not invest to any significant extent in a business sector that could give rise to a conflict of interest with the Minister’s public duty.

2.10. If a Minister becomes aware that a fund or trust has invested in a company that might give rise to a perception of a conflict of interest, the Minister should inform the Prime Minister immediately and liquidate the investment in the fund or trust if required to do so.

2.11. If a Minister is required by these Standards to dispose of an interest of any kind, the transfer of the interest to a family member or to a nominee or private trust is not an acceptable form of divestment.

Howard code

Ministers are required to divest themselves, or relinquish control, of all shares and similar interests in any company or business involved in the area of their portfolio responsibilities. The transfer of interests to a spouse or dependent family member, or to a nominee or trust, is not an acceptable form of divestment. Ministers may transfer control to an outside professional nominee or trust providing the minister or immediate family exercises no control on the operation of the nominee or trust.