Gillard rewards her henchmen

Victorian right-winger Bill Shorten, who helped make Ms Gillard leader, is the biggest winner, moving into cabinet and the portfolio of Employment and Workplace Relations, a key policy battleground for 2012. He also retains Financial Services and Superannuation.

Mr Shorten, a future leadership aspirant, declared: "I am absolutely stoked that our Prime Minister has given me this privilege. I completely and utterly support our Prime Minister."

Mark Arbib, another right-wing factional player involved in elevating Ms Gillard, has been promoted to Assistant Treasurer, in changes that see Victorian left-winger Kim Carr forced to the outer ministry while two other left-wingers, Tanya Plibersek and Mark Butler, go into cabinet.

An upset Senator Carr has lost the Industry portfolio to Greg Combet, who retains Climate Change. Senator Carr becomes Minister for Manufacturing and Defence Materiel under Mr Combet.

The government leader in the Senate, Chris Evans, keeps Tertiary Education and Skills and gains Science and Research from Senator Carr's old empire, but loses the key area of Employment and Workplace Relations. He will share a new department with Mr Combet. Ms Gillard failed in her bid to push Robert McClelland out of cabinet but his Attorney-General portfolio goes to Nicola Roxon, who switches from Health.

A former associate to a High Court judge, Ms Roxon will be the first female federal Attorney-General. She also becomes responsible for Privacy and Freedom of Information.

Mr McClelland has a cobbled together job of Minister for Housing, Homelessness and Emergency Management. His anger was obvious in his media statement about his achievements when he said the PM had "advised" he would be appointed to his new post.

Cabinet has expanded from 20 to 22 because Ms Gillard was unable to create more than one vacancy. It is the biggest cabinet since the Whitlam years, when cabinet included all ministers.

Ms Plibersek takes over Health, while Mr Butler retains Mental Health and Ageing and gains Social Inclusion.

Ms Gillard apparently tried unsuccessfully to shift Schools Minister Peter Garrett sideways, although her office denied she wanted him out of cabinet.

But she has appointed one of her closest allies, Brendan O'Connor, as minister assisting Mr Garrett on schools, with responsibility for the sensitive Gonski report on schools funding. Mr O'Connor also takes over Human Services from Ms Plibersek.

Ms Gillard said the appointment of an additional minister working on schools "reflects the depth of the government's reform agenda to improve the quality and equity of school education".

Small Business Minister Nick Sherry goes to the backbench, while fellow Tasmanian Julie Collins joins the ministry with roles including Community Services and Status of Women.

Agriculture Minister Joe Ludwig survived but voluntarily ceded his role as manager of government business in the Senate, which goes to Senator Arbib.

Ms Gillard said the reshuffle would better enable the government to focus on its 2012 priorities: keeping the economy strong, promoting jobs and economic transformation, and spreading the benefits of prosperity to all.

Tony Abbott said Ms Gillard "had to buy the loyalty of the faceless men but she couldn't afford to sack anyone . . . It's a reshuffle about meeting the challenge of Kevin Rudd".

ACTU secretary Jeff Lawrence welcomed Mr Shorten's new role, saying he was someone "unions know and can work well with".

Senator Carr said he was committed to continue working for the future of manufacturing.

The Australian Manufacturing Workers Union vehicle division slammed the downgrading of manufacturing to the outer ministry as "yet another sign that the Prime Minister does not understand manufacturing's importance to the economy".

National divisional secretary Ian Jones recalled Mr Rudd saying he wanted to lead a country that still made things. "It seems, however, that the Prime Minister has a desire to repudiate the Rudd legacy in all of its forms".