Leader looks to Bill Shorten and Mark Arbib to deliver for Labor

TWO beneficiaries from Monday's reshuffle are Bill Shorten and Mark Arbib, who gave Julia Gillard the prime ministership.

TWO key beneficiaries from Monday's ministerial reshuffle are Bill Shorten and Mark Arbib: the key factional powerbrokers who gave Julia Gillard the prime ministership. Both now hold important portfolios so far as the business community is concerned.

On the surface, these twin promotions appear to be defensive political plays, designed to sure up Gillard's numbers and protect her right flank. But there may be policy method in Gillard's madness.

Shorten moves from the assistant treasurer's post into cabinet as the new Workplace Relations Minister. He retains his responsibilities for superannuation and financial services. Arbib remains in the outer ministry but has been elevated from indigenous employment and economic development, to Assistant Treasurer and Minister for Small Business. The next step is cabinet. As a bonus, Arbib gets to retain the sports portfolio so that he can enjoy the London Olympics next year.

At her press conference Gillard bristled when asked: "Some people might look at this list of changes that you've made and note that you've promoted two, in particular, who were involved in your elevation to the job of Prime Minister. I'm talking about Bill Shorten and Mark Arbib. What would you say to anyone who sees some kind of association with their elevation and you and your promotion?"

She responded: "I'd say anybody making that assertion was incapable to logical thought."

Gillard's condescending retort only served to highlight her own inability to see what everyone else plainly could: of course promoting Shorten and Arbib has the appearance of rewarding supporters. But it also goes much deeper than that, and the choice of portfolios has been calculated to play to each of their strengths.

Shorten's strength is his retail politics, and his ability to negotiate between competing parties. His background as a union official ensures he will quickly understand the issues in his new portfolio. But his style makes it likely that he won't simply do the bidding of his former mates in the union movement. Shorten is likely to model his approach on how Bob Hawke approached his role as prime minister during the heady days of the 1980s. When the Accords were being negotiated the harshest criticism of Hawke came from union leaders on his own side of the political divide. Business will be watching closely to see how Shorten tackles challenges surrounding the Fair Work Act.

And while he needs to work on his parliamentary performances in the new year, Shorten's style will turn up the pressure in the House of Representatives on Tony Abbott's unwillingness to spell out an alternative IR vision. The previous minister, Chris Evans, was stuck in the Senate, and the opposition spokesman, Eric Abetz, is also a senator. Abbott's unwillingness to reshuffle his line-up, even if only to ensure match-ups mirror the chambers ministers operate within, could leave the opposition looking flat-footed during question time.

Understanding what Arbib adds to the assistant treasurership and small business ministry is more nuanced. Stakeholders from his previous portfolio line up to commend the job he did behind the scenes, and this is the role Gillard has planned for him in his new post. Gillard is looking for Arbib to use his considerable backroom skills to convey to small business, as well as the business community more widely, why this government should not be seen as the enemy. The small business concessions attached to the new mining tax are one example of Labor trying to even-out our two-speed economy. Arbib's job will be to burrow into the small business constituency -- a natural ally of the Liberal Party -- and convince them that Abbott's opposition to the mining and carbon taxes looks after a small number of big (not small) businesses. And that it exacerbates the difficulties of the two-speed economy rather than addressing them.

While Wayne Swan loathes the need for a treasurer to tip one's hat to business leaders, Arbib is far less of a traditional class warrior. As NSW state secretary of the Labor Party, he forged links between the state government and the business community, which shut the Coalition out for years. There could even be a fundraising opportunity to come out of Arbib's promotion. So long as the imagery of powerbrokers now running key economic portfolios doesn't get in the way of the roles Gillard has ascribed for Shorten and Arbib, their elevation could reap rewards for the government.