Gillard tipped to announce weekend reshuffle

Julia Gillard. Photo / Getty Images.

CANBERRA - Prime Minister Julia Gillard is tipped to announce a reshuffle this weekend following independent MP Rob Oakeshott's rejection of a cabinet portfolio in a minority Labor government.

The former Nationals MP turned down Ms Gillard's offer to be minister for regional Australia, after two days of consideration.

Under the deal, Mr Oakeshott would have been allowed to sit in cabinet for regional development issues while keeping his independent parliamentary voting rights on all other matters.

But he declined the offer after speaking with Ms Gillard by phone on Friday afternoon.

The MP for Lyne said there had been "political heat" around his siding with Labor as he held a conservative-leaning seat.

"These are pretty unusual circumstances," he told reporters at Port Macquarie on the NSW mid-north coast.

After talking with family and friends, Mr Oakeshott said he considered the political ramifications of trying to get his regional affairs package through a divided parliament.

"I'm hoping it can be brought home by someone with potentially less thorns on them," he said.

"If I was to take this portfolio, I think there are some organisations still in parliament that may want to bring the package down."

Mr Oakeshott's rejection of a portfolio means Ms Gillard can announce the line-up of her ministry, possibly on Saturday.

Former prime minister Kevin Rudd is widely expected to be given foreign affairs.

Incumbent Foreign Minister Stephen Smith is tipped for the vacated defence portfolio while Financial Services Minister Chris Bowen has been mooted as the next finance minister.

Penny Wong is expected to leave the politically challenging climate change round to become attorney general.

Under that scenario, junior minister Greg Combet, a former ACTU boss, could take over cabinet responsibility for tackling global warning.

Simon Crean, who holds the super portfolios of education, employment and workplace relations, said he would be happy to accept any position.

"I'm delighted to play whatever constructive role I can play in the Gillard government - I think it will be an exciting time," the former Labor leader told reporters in Melbourne.

"I keep hearing people say how difficult it is going to be - I thrive in difficult circumstances."

As Gillard considered her possible changes, Lindsay Tanner, who retired as finance minister after the election, accepted an appointment as special adviser to global asset management firm Lazard, prompting criticism from the Greens and shareholder activists.

Opposition Leader Tony Abbott is expected to unveil a more minimal reshuffle in coming days, with his predecessor Malcolm Turnbull to return to the frontbench.

Possible conflicts of interest could have been on the mind of Mr Oakeshott in declining a ministry.

Ahead of his decision, fellow independent Nick Xenophon advised Mr Oakeshott to decline any offer of a portfolio, arguing it would compromise his credibility as an unaligned MP.

"It would be a poisoned chalice for him," Senator Xenophon told ABC Radio.

"It would be good for a Labor government, but not so good for him."

Senator Xenophon suggested Mr Oakeshott instead chair a committee on regional Australia, which would give him scope to freely criticise government decisions.

In a shorter media conference, Mr Oakeshott downplayed suggestions he had asked former NSW Labor premier Morris Iemma about a ministry in 2007 when he was a state MP.

"I don't have any recollection of any conversation," he said.

"If I wanted to be a minister, I would have stayed in the National Party, I was a shadow minister."

Nationals Senate leader Barnaby Joyce used the News Limited report about Mr Oakeshott's past ministerial aspirations to question his impartiality.

But fellow independent Tony Windsor, who joined Mr Oakeshott in giving Labor minority government, hit back at Senator Joyce describing him as someone with a "bash and bully" approach.

He appealed to the opposition to work with the independents in a hung parliament to get legislation passed.

Ms Gillard and Mr Abbott suspended hostilities on Friday as they attended the Brisbane funeral of Lance Corporal Jared MacKinney, who in August became the 21st Australian soldier to die in Afghanistan.

- AAP