''My chief of staff has no connection with the food industry and is simply doing his job.''

Within hours, ''for the sake of completeness'', she was standing in front of the Senate to reveal that her chief of staff, Alastair Furnival, did in fact have ''a shareholding'' in the food industry lobbying company, due to his previous employment with it.

That late-night statement would trigger allegations Nash had breached the ministerial code of ethics and misled Parliament, and lead to Furnival's February 14 resignation over his perceived conflict of interest.

It has also seen one of the few triumphs of the former Labor government, preventive health, turn into one of the first major scandals of the Abbott government.

It started with a simple idea: a food rating system that could give people easy to understand information on packaging about how one choice compares to another.

The need for urgent action on Australians' unhealthy lifestyle is clear, as Health Minister Peter

Dutton said in a major address on the health system on Wednesday.

Two-thirds of adults and one quarter of children are overweight or obese, with 400 extra children developing type 2 diabetes each year.

''Rising rates of obesity and diabetes may be the seeds of a future crisis,'' Dutton said.

In 2011 a government review into food labelling recommended ''traffic light'' labels be developed in response, to flag more and less healthy choices in packaged foods. But that was a bridge too far for Labor, facing strong opposition from the food industry.

Instead it convened a panel of industry representatives and health experts to find common ground.

''When the whole process started I thought we were going to end up with a bronze medal solution,'' Public Health Association head Michael Moore said.

''But as we walked down this path I realised what we were coming up with was much better.''

The agreed scheme was a star rating system, with healthier foods receiving more stars.

Moore said a star rating system is easier to understand for people who aren't trying to avoid one ingredient such as salt, and it also allows companies to reformulate foods and add healthy ingredients to get more stars.

There are gaps. The scheme is voluntary, and the ratings do not look at the quantity of the food you should eat. So fruit juice, which when consumed in large quantities packs a significant calorie punch, would still get five stars.

But Moore says he was ''delighted'' when the site went live, after a change in opinion among some industry players had left him fearing it would be delayed.

''The industry so dominates the marketing of foods and the messages, it makes it really hard for people to make well-informed decisions about their health,'' Moore says. ''People have to have a fair amount of information from both sides.''

However, only hours after Moore's group, along with the Heart Foundation and Choice, had put out media releases welcoming the website, it had vanished.

Officials in the Health Department first received a phone call from Furnival telling them the site must go.

Kathy Dennis, the senior official in charge of the site, refused on the grounds that as it was developed through the Council of Australian Governments food ministers' forum, Furnival had no authority to remove it.

Soon, Nash was on the phone.

It was only over three days in Parliament that the full extent of her staffer's involvement in the take-down of the website, and his links to the junk food industry, emerged.

Nash first acknowledged Furnival was a former chief economist for Cadbury, and was married to the owner of a lobbying firm that works extensively for the junk food industry, Australian Public Affairs, and had worked there himself.

Then she revealed his shareholding in it, which she said both she and the Prime Minister's office were aware of.

Next came the news that neither she nor Furnival had declared a conflict of interest when asked during the standard disclosures at the food ministers' forum.

''There is no conflict of interest,'' she repeated. ''My chief of staff complies with proper internal standards … My chief of staff took proper and appropriate steps to prevent any conflict of interest with the private business of APA and by withdrawing from any work from APA, and on that basis there was no conflict of interest at that meeting.'' Yet ASIC records show Furnival was more than just a shareholder in Australian Public Affairs. In fact, the only shareholder is another company, Strategic Issues Management. That company has only two shares: one is owned by Furnival and the other by his wife.

Furnival has since resigned, and the government has made it clear it considers the matter over.

It has stayed quiet this week in the face of more revelations that Furnival's firms had done work in the alcohol industry, and that he played a key role in the removal of funding for Australia's peak drug and alcohol body.

And news of his involvement in lobbying for government money for Cadbury, which has been promised $16 million from the public purse by Prime Minister Tony Abbott.

But Labor health spokeswoman Catherine King says the matter will not just go away.

''Senator Nash has breached the ministerial code,'' she says.

''I also believe that her former chief of staff breached the staffers code, and the minister had an obligation to ensure he adhered to that code. We have got the public health experts across the land clearly saying that they don't have any faith in the minister … We intend to pursue this matter through every avenue available to us in the Parliament.''

Rob Moodie, a professor of public health at the University of Melbourne, says the issue is an example of a much more insidious problem. ''The ultra-processed food industry undermine virtually every public health proposal that is put forward,'' he says. ''The only thing they are interested in is utterly ineffective self-regulation.''

He was the co-author of a paper published in the medical journal The Lancet last year that argued transnational corporations have been major drivers in the spread of obesity and its associated diseases across the globe.

''The food industry is so powerful in Australia that at the moment politicians are more afraid of them than they are of others who oppose them,'' he says.

''This won't change until there's enough outrage in the community, like there was about tobacco.''