PM bans sex between ministers and staff and calls on Barnaby Joyce to consider his position

Prime Minister Malcolm Turnbull has moved to limit the damage from the Barnaby Joyce scandal, effectively abandoning the Nationals leader over a "shocking error of judgment" while also taking the unprecedented step of banning sex between ministers and staff.

In an extraordinary press conference late on Thursday, the Prime Minister gave the clearest signal yet he had lost confidence in the Deputy Prime Minister, but conceded he had no power to force him out.

Mr Turnbull savaged Mr Joyce for the "terrible hurt and humiliation" he had inflicted on his family by having an affair with staffer Vikki Campion, who is now pregnant.

Attempting to draw a line under the saga, Mr Turnbull said that "whatever may have been acceptable or to which a blind eye was turned in the past, today, in 2018, it is not acceptable".

The affair had raised very serious issues about the culture of sex and power inside Parliament House and deficiencies in the ministerial code of conduct, Mr Turnbull said.

Mr Turnbull's rare public condemnation will force Mr Joyce and the Nationals to consider whether the relationship between the two men can be salvaged, or if switching to a new leader would be a better option.

Treasurer Scott Morrison told Fairfax Media the Prime Minister had shown "extraordinary leadership and strength".

"He has modernised our political culture and for that we will be forever in his debt," Mr Morrison said.

"I think the PM gave one of the strongest statements I have heard for marriage in my experience."

Illustration: Matt Golding

However, it drew an immediate and angry response from Nationals senator John Williams.

"He obviously wasn't very happy, there are plenty of people not happy, but when it comes to the Nationals we will determine who is the leader of the Nationals," Senator Williams told Fairfax Media.

"It was too much..to give the Deputy Prime Minister a personal bucketing in front of the media doesn't help heal the wounds."

Mr Turnbull's move came after an extraordinary fortnight that has seen his government’s agenda derailed, political momentum stall and Nationals MPs consider tapping Mr Joyce on the shoulder.

Earlier in the day, Mr Turnbull took the extraordinary step of announcing Finance Minister Mathias Cormann will serve as acting Prime Minister next week after convincing Mr Joyce to take personal leave for a week. Fairfax Media understands Mr Joyce will still be paid his $8000-a-week salary.

In a horror Question Time for the government, Labor also raised new questions about Mr Joyce's relationship with Greg Maguire - a businessman friend who has allowed the Deputy Prime Minister to live in a townhouse rent free for six months - in particular a $5000 payment from his department to an Armidale business linked to Mr Maguire.

Prime Minister Malcolm Turnbull moves to limit the fallout from the Barnaby Joyce saga. Credit: Alex Ellinghausen

Mr Turnbull said Mr Joyce had set off a "world of woe" for Natalie Joyce, his wife of 24 years, and their four daughters.

"Barnaby knows he made that shocking error of judgment. He knows that he let down his wife and daughters," Mr Turnbull said.

"He needs that leave. He needs that time to seek forgiveness and understanding from his wife and girls, he needs to make a new home for his partner and their baby, who is coming in April."

Mr Turnbull said Mr Joyce should also use that time to "reflect" on his actions and "consider his own position, obviously".

But he conceded he was powerless to force Mr Joyce to stand down as Deputy Prime Minister because the Nationals leadership can only be decided by the Nationals party room.

Reflecting on the changes to the code of conduct, Mr Turnbull said it did not "speak strongly enough to the values that we should all live".

He said he would make a series of changes to the code but the first would ban ministers - regardless of whether they are married or single - from any sexual relationship with staff.

"Doing so will constitute a breach of the standards," Mr Turnbull said. "It is about time that this change was made. Probably should have been made a long time ago. And this is the standard that I will hold from this day forth all of my ministers to.

"It is not acceptable for a minister to have a sexual relationship with somebody who works for them. It is a very bad workplace practice. And everybody knows that no good comes of it."

Mr Turnbull confirmed Mr Joyce would have breached the code and faced the sack under the change: "If he did what he did last year tomorrow, or today, he would be in breach of the code."

Fairfax Media understands Mr Joyce agreed to take time out after a series of conversations with Mr Turnbull in recent days. Mr Turnbull had said twice in Parliament earlier this week that Mr Joyce would be acting prime minister when he travelled to the US next week.

Mr Joyce's office said he has asked for leave because "he wanted to support his family and partner after such intense public focus on personal matters".

Labor seized on the decision as evidence that Mr Turnbull no longer had confidence in his deputy.

The opposition then shifted its focus to Mr Joyce's relationship with Mr Maguire. Mr Joyce has denied that he asked Mr Maguire to pay the rent on the Armidale home after he separated from his wife of 24 years. He says Mr Maguire made the offer as a friend and Mr Joyce originally offered to pay.

Barnaby Joyce in Question Time.

But that appears to contradict statements Mr Maguire has made to the media which suggest Mr Joyce approached him. Under ministerial standards, ministers "must not seek or encourage any form of gift in their personal capacity".

Labor also used Question Time to drill down on whether Mr Joyce was aware of any taxpayer money going to businesses owned by Mr Maguire.

It then revealed that Mr Joyce hosted a Department of Agriculture dinner at the Quality Hotel Powerhouse in Armidale, owned by Mr Maguire. The event on March 31 last year cost taxpayers $5068 for food and drinks.

Mr Joyce insisted "decisions in the vicinity of $5000 don't generally go across the minister's table".

"I'm unaware of any decision that I would ever have made to be part of that decision, and anything beyond that, I will take it on notice," he said,

The Secretary of the Department of Agriculture later confirmed in a statement that bureaucrats selected the venue "in line with our procurement guidelines".

Liberals are furious with Mr Joyce over his marital infidelities, and the questions over whether he breached the ministerial code of conduct when redeploying Ms Campion to the office of senator Matt Canavan, and MP Damian Drum.

In another embarrassment for the government, the Senate voted 35 to 29 in favour of a motion calling on Mr Joyce to resign for "clearly breaching the standards required of ministers". No Liberals senators spoke in Mr Joyce's defence. The motion has no practical effect but adds to Mr Joyce's discomfort.