Abbott resets team for year ahead

Federal Finance Minister Mathias Cormann. (AAP)

Prime Minister Tony Abbott has reshuffled a number of senior ministries, and axed Defence Minister David Johnston altogether.

Tony Abbott has dumped Defence Minister David Johnston and named Kevin Andrews as a surprise replacement, in a major reshuffle to reset and refocus the government for the new year.

The prime minister on Sunday announced a much bigger frontbench overhaul than expected, which also moves immigration minister Scott Morrison into an expanded social services portfolio, and promotes Sussan Ley to the health ministry.

As health minister she becomes the second woman cabinet, after foreign minister Julie Bishop.

Her predecessor Peter Dutton has been given the immigration portfolio, while Josh Frydenberg will become assistant treasurer.

He replaces Arthur Sinodinos, whose resignation on Friday sparked the ministerial rejig.

The reshuffle just days before Christmas is an attempt to reboot the coalition, who by the prime minister's own admission had a "ragged" end to 2014.

The new frontbench team will be sworn in on Tuesday, and would "reset and refocus the government for the coming year", Mr Abbott said.

"This is a good team. It is a strong team. It is a balanced team," he told reporters in Canberra.

"It will put jobs and families at the heart of our political agenda for 2015."

As predicted, the prime minister used Senator Sinodinos' resignation to axe his defence minister, who came under fire for saying he would not trust government-owned shipbuilder ASC to build a canoe.

The prime minister defended Senator Johnston, but said "no one goes on forever"

"David has done a fine job as defence minister. He has copped a bit of flack, unfairly," he said.

Mr Andrews would be a "very, very safe pair of hands", he said.

The prime minister heaped praise on outgoing immigration minister Scott Morrison, saying he was a master of difficult policy and administration who had all but stopped the boats.

As part of an expanded social services portfolio Mr Morrison will have responsibility for child care and Mr Abbott's signature paid parental leave scheme, as well as the government's unpopular welfare reforms.

"He is a very tough and competent political operator but he is also an extremely decent human being," the prime minister said.

"We need good judgment in these areas and that is exactly what you will get from Scott Morrison."

The elevation of Ms Ley to cabinet has been accompanied by the promotion of Kelly O'Dwyer and Karen Andrews as parliamentary secretaries, addressing long-standing criticism of the lack of women in the ministry.

Mr Abbott was pleased the number of women on his frontbench had increased, but stressed all appointments were made on merit.

Acting opposition leader Penny Wong said no reshuffle could fix the government's biggest problem, its unpopular budget.

"You might change the tyres on the bus but the wheels are still spinning," she said.

Greens leader Christine Milne said it was the government's policies that the public objected to.

"He can change the faces but it is the policies that have to change," she said.

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