HOST: Ms Gillard, good morning and welcome.PM: Good morning Sabra.HOST: In announcing this reshuffle you said it would give the Government the fire power and focus it needed for 2012. Is that an admission that you didn't have focus this year and that you've been firing dummy rounds?
PM: 2011 has been a difficult year, that's obvious. In 2012 I want Australian families to see the benefits of the changes that we've delivered this year and I also want to see us focusing on jobs, the economy and fairness for the future. It's the job of government to deliver change and to publicly make the case for change.So of course in considering who should be in cabinet and who should be in the ministry, I have selected people who have got the skills to deliver the changes we need, to keep strengthening our economy, to keep increasing jobs, to have the jobs of the future with fairness as well. But I've also selected people who can publicly make that case for change.HOST: You've got 22 people in the Cabinet now, that's a fairly unwieldy size. That doesn't suggest decision, or is it that case - is that size now because you couldn't force Robert McClelland and Peter Garrett out?PM: Well it's that size because of the breadth of the Government's priorities. I wanted to make sure that the things that we are focusing on in 2012 are around the Cabinet table. I've done that in the structure that I've chosen.In terms of assertions that have been made publicly here about people threatening to resign and the like, they are completely untrue.HOST: Well Robert McClelland told me that he didn't want to go, he didn't want to leave being Attorney-General.PM: No, he didn't want to leave being Attorney-General. Being involved in these conversations about change obviously means you have a set of difficult conversations.Robert would have preferred to stay but he also identified to me a great passion for the emergency management role, and having lived through the last summer of natural disasters, I thought it was very appropriate for Robert to take that role and to represent it around the Cabinet table, also, dealing with the important role of housing and homelessness.What I was directing your attention to, Sabra, was some of the silly commentary that's been around about people threatening to resign. That is completely untrue.What I've done here is I have selected the best team, the strongest team, to deliver the Government's priorities in 2012, which are about jobs and the economy and fairness.HOST: They didn't need to threaten to resign, you know what the numbers are in parliament.PM: Oh crazy. What's the point of that question?HOST: Well the point of the question is your numbers are so tight, even you know that if one threatened to go that that could possibly lead to your government falling over?PM: So now you're building hypothetical on hypothetical about something that didn't happen.I have selected the best team to meet the circumstances of the nation now.2011 has been a difficult year. 2012 is an important year for our nation and an important year for the Government where we will move to the delivery of the things that we have created in 2011, including our clean energy future, including the Mineral Resource Rent Tax and we will continue to roll out the NBN.We will build on those things to create the economy of the future in this the Asian century, a century of transformation. And at the same time we will deliver our priorities which ensure we are not leaving Australians behind. That's about health, mental health, it's about ageing, it's about disability, it's about social inclusion generally. It's about all of those priorities that are now around the Cabinet table in the appropriate form.HOST: "Gillard rewards her henchmen" - that's one of the headlines in the papers today and it's a theme that runs through many of the newspapers today. There's no denying that you have rewarded the people who helped you into the job last year, Mark Arbib and Bill Shorten.PM: Well let's have a look at the actual facts.I have made selections which mean we have more women in cabinet than ever before. I think that's important. I've made selections like Nicola Roxon becoming the first ever woman to be Attorney-General of this country. I've put Tanya Plibersek into health because I think she will do a remarkable job delivering on and building on Nicola Roxon's reforms. I've asked Mark Butler to step into the Cabinet because of the importance of issues like mental health and ageing to our society today. I've asked Julie Collins to serve from Tasmania.What this means overall is that there's a diversified team. More women than ever before and women who bring a life experience about what it's like to juggle a family as you try and build a career.Yes, Bill Shorten has been promoted, and that's appropriate. Bill's done a remarkable job when he had disability as a responsibility. The reason a National Disability Insurance Scheme is on our nationa's agenda is because of Bill Shorten and his work. He's done a great job in superannuation and he will now have the opportunity to build on that with employment and workplace relations. Mark Arbib has capacity, the capacity to step up and do more and I've asked him to do more.HOST: Why did you demote Kim Carr? He's been universally praised inside and outside Labor. Some insiders from your party say that it's - he has been duded and it defies logic.PM: I wanted to create a new department and new portfolios to focus us on the future economy and that is what I've asked Greg Combet, in particular, to do. In 2011 we have done what we need to do to build a clean energy future - put a price on carbon. That will change our economy.At the same time the Asian century is changing our economy and we have to find Australia's place in that century. So we are maximising the opportunities. And the mining boom is changing our economy too, putting pressure on other industries, like manufacturing, like tourism, like international education. I've asked Greg to take a broad portfolio, which will put him in the position of designing and working with businesses and industry in the Australian community on that future economy.HOST: But it's not a good look for Kim Carr, a man who works very hard is demoted.PM: Well these are about difficult decisions.Clearly in these conversations and making selections, you do have to make decisions which effect individuals, which individuals may not welcome. As leader that's my job, to get the best possible team, the strongest possible team.What I've asked Kim Carr to do is to focus on his traditional passion for Australian manufacturing as well as take on the very important portfolio of defence materiel, which is about the equipment and capabilities of our defence force.He will work with Greg Combet because I want manufacturing to have a strong place in our future economy. Clean energy will have a strong place, the NBN will have a strong place, and we need in this time of transformation to make sure our economy grows in a way which offers opportunity for all. I don't want to see regions and industries left behind.HOST: Prime Minister, thanks for your time this morning.PM: Thank you.