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Labor, Libs get down to business -

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KERRY O'BRIEN: How quickly things are changing in the nation's capital. Kevin Rudd has chosen the
team he'll trust to help him govern Australia, and a shaken Liberal party has elected former
Defence Minister Brendan Nelson by a mere two votes as a better option to lead them in Opposition
than Malcolm Turnbull.

The Prime Minister-elect has handed his deputy Julia Gillard a new super-ministry combining
education with industrial relations: a big challenge by any measure. And, Dr Nelson has handed his
chief rival the plum post of Shadow Treasurer. And so the stage is set for a fascinating year ahead
in national politics.

Having interviewed Mr Rudd a couple of nights ago, I'll be talking with the new Liberal leader
shortly. But first political editor,

Michael Brissenden on the events of this super Thursday.

MICHAEL BRISSENDEN: Yes, here it is, this is the new look Labor caucus. Some new faces and some new
protocols, as well.

Such a resounding election win after 11.5 years in Opposition has given this Labor Prime Minister
unprecedented authority.

Labor history has already been hung in the new Government Party Room, but Kevin Rudd is turning
Labor tradition on its head.

The factions have had no role at all in picking the new frontbench. Not even faintly relevant, says
Kevin Rudd.

KEVIN RUDD, PRIME MINISTER-ELECT: Look, part of modernising the Labor Party is putting all that
stuff behind us, and this is a significant step in that modernisation process, and it will be
continued.

MICHAEL BRISSENDEN: The new frontbench line up contains few surprises in personnel, at least. The
new star recruits Maxine McKew, Greg Combet and Bill Shorten have been given training wheels with
parliamentary secretary positions and there are a few new faces on the frontbench, such as
30-year-old Kate Ellis.

But the real surprises come with the portfolios. Stephen Smith is the new Foreign Minister. Robert
McClelland has been moved to Attorney-General, and Simon Crean has been given Trade. Peter Garrett
keeps the Environment and will be in Cabinet, but he's joined in a new Cabinet position by Penny
Wong, who'll be the Minister for Climate Change and Water.

The biggest surprise, though, and the biggest job of all is Julia Gillard's. The new Minister for
Workplace Relations and

Education; a roll back and a revolution in one.

KEVIN RUDD: Having a seamless approach to preparation for work, workforce participation and the
laws governing workplaces is, I think, a critical step forward.

REPORTER: Big job?

KEVIN RUDD: Big job, but for a very talented individual and if I did not have that confidence, then
I wouldn't have done it. But can I say, I have absolute confidence in Julia's ability to discharge
these responsibilities.

MICHAEL BRISSENDEN: As expected, Wayne Swan and Lindsay Tanner keep their economic portfolios of
Treasury and Finance. Nicola Roxon keeps Health and Joel Fitzgibbon, Defence. There were a few
shadow ministers that didn't make the cut.

But overall the Labor mood is buoyant. The ministry will be sworn in on Monday and Cabinet will
meet next week for the first time. The big ministerial offices may take time getting used to but
adjustments under way on the other side are greater.

JOE HOCKEY, OUTGOING WORKPLACE RELATIONS MINISTER: Gotta get down to the carpark.

MICHAEL BRISSENDEN: After Saturday night the Liberal Party is a shell of its former self and there
are some old familiar faces

in different roles.

PETER COSTELLO, OUTGOING TREASURER: The Liberal Parliamentary Party has elected Brendan Nelson as
its new leader. The result of the ballot was 45 to 42. The Liberal parliamentary party has elected
Julie Bishop as the new Deputy Leader.

MALCOLM TURNBULL, UNSUCCESSFUL LEADERSHIP CANDIDATE: It's a great result for the party and Dr
Nelson and Julie Bishop will be talking to you all shortly.

REPORTER: How divided is the leadership?

MALCOLM TURNBULL: Brendan and Julie have my absolute commitment and loyalty, as they do of every
person in the room.

REPORTER: But you must be disappointed you missed out by three votes?

MALCOLM TURNBULL: Well, I guess one is always disappointed, but I'm delighted that the party's made
a decision. We've got a great team and we'll win in 2010.

REPORTER: Will you challenge for the leadership, Mr Turnbull?

MALCOLM TURNBULL: No, no, we've chosen a leader, and a deputy leader and they have my absolute
support. Now watch out, you are going to walk into a wall.

MICHAEL BRISSENDEN: With the result as close as it was, it suggests the Liberal leadership will not
be without its obstacles in the next few years. Just two votes in it. Healthier margins than that
have fuelled Labor instability more than once in the recent past.

Brendan Nelson takes the Liberal reins pledging to make the party more moderate. But he would know
that Malcolm Turnbull and Tony Abbott will be watching his every step and preparing themselves to
come at him from either flank should he stumble.

BRENDAN NELSON, FEDERAL OPPOSITION LEADER: Today is a significant day in the history of the Liberal
of Australia. As one chapter closes another opens today.

MICHAEL BRISSENDEN: In more ways than one. This is a unique day in politics.

BRENDAN NELSON, AMA PRESIDENT (1993): I've never voted Liberal in my life! It's about time!

MICHAEL BRISSENDEN: After Saturday, we have a convergence to the centre and a strange
counterintuitive symmetry. Kevin

Rudd's father was a National Party member. The new Liberal leader was once a member of the Labor
Party and came from a family steeped in Labor traditions.

BRENDAN NELSON: I have come to liberalism and I have come to the leadership of the Liberal Party of
Australia through an unorthodox route. I was born in Melbourne, and as an infant my family moved to
Launceston. My dad was a Labor man, and

my family, by and large, was a Labor family.

MICHAEL BRISSENDEN: Brendan Nelson sold himself to his Party Room as a progressive. He's already
begun to realign the policy positions on some of the key issues like Kyoto, and begun to soften the
rhetoric on Iraq. But WorkChoices will be the big policy challenge. Julie Bishop, as deputy Liberal
leader, will also take on industrial relations, head to head with Julia Gillard. Ms Bishop is not
one of those who favours any policy softening in that area.

JULIE BISHOP, DEPUTY FEDERAL OPPOSITION LEADER: It is important to our country and particularly to
my state of Western Australia, that there is a political force in this country that will stand up
for small business, that will stand up for our mining sector, and for the jobs that they create in
this country. And we will fight to maintain jobs and low unemployment across Australia.

MICHAEL BRISSENDEN: How that fight is progressed in the Senate will be important to watch. Labor
says it has a mandate to roll back WorkChoices. Malcolm Turnbull has been given the shadow Treasury
role, a position traditionally occupied by the Deputy Leader, but one that is also seen as a
springboard to leadership, whatever side of the House you sit on.

But the more immediate problem for the new Liberal leader is rebuilding a shattered party. Out of
office in every state, and looking at a long haul back to the Government benches in Canberra.

And on a day when traditions were swept aside all over the place, there was this. A remarkably
friendly and welcoming transfer of power in the official prime ministerial residence.

JOHN HOWARD, OUTGOING AUSTRALIAN PRIME MINISTER: Hello, Kevin. Welcome to the Lodge.

KEVIN RUDD: Thank you very much.

JOHN HOWARD: Good to see you.

MICHAEL BRISSENDEN: In 1996, Paul Keating refused to let the cameras record this moment. But then,
John Howard never really lived here, anyway. The Rudds say the Lodge will be their new home.

KERRY O'BRIEN: Political editor, Michael Brissenden