Clare O'Neil and Andrew Giles have been dumped from the home affairs and immigration portfolios but escaped exile as the prime minister seeks to refresh his frontbench.
After months of speculation the pair would be shifted following the release of more than 150 immigration detainees after a High Court ruling in November, Anthony Albanese used a trio of cabinet resignations as cover to shuffle the deck.
But he stressed it should not be construed as a failure on their part and rejected suggestions the reshuffle was linked to criticism over the government's handling of the saga.
"What Clare O'Neill and Andrew Giles have had to do is to repair the damage which has been done," the prime minister said.
"What you do when there's a reshuffle is that there is a change that then has a knock-on effect."
Ms O'Neil will move into the role of housing minister, where the government continues to face pressure from the Greens, while Mr Giles will remain in the outer ministry and take on the skills and training portfolio.
"Claire of course is a great communicator. She will lead the delivery of our ambitious Homes for Australia plan that has been established by minister [Julie] Collins," Mr Albanese said.
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Tony Burke will step into the home affairs role and also take on the role of immigration minister, elevating the portfolio to cabinet.
Mr Burke previously served as immigration minister in 2013 under the Rudd government.
"He is someone who will bring that experience to what remains a challenging portfolio," Mr Albanese said.
Senator Murray Watt will take over as employment and workplace relations minister, while Julie Collins moves to the agriculture portfolio, which she held in opposition.
NT senator Malarndirri McCarthy will replace outgoing Indigenous Australians Minister Linda Burney.
"Malarndirri McCarthy was the obvious person to move into that portfolio, building on the legacy of Linda Burney," Mr Albanese said.
Pat Conroy has been elevated to cabinet in his role as the minister for defence industry and capability delivery, and international development and the Pacific.
"Obviously, AUKUS, both pillar one and pillar two are critical … I've made the decision that this area is such an important area of delivery that it is worthy of two cabinet ministers," Mr Albanese said.
NSW senator Jenny McAllister was also promoted to the outer ministry as the minister for cities and emergency management.
Refresh a 'significant move forward'
The cabinet shake-up is the first for Mr Albanese since he came to power in 2022. With an election due by May next year at the latest, the prime minister will be hoping this is the line up he presents to voters on polling day.
Along with a number of other appointments to the assistant ministry, the prime minister also revealed Peter Khalil will take on the role as Special Envoy for Social Cohesion, with a promise an announcement on a special envoy to combat Islamophobia will come in due course.
The "united" and "ambitious" team will have its first full meeting on Monday morning after they have been officially sworn into their new jobs, Mr Albanese said.
"This combination of changes represent a significant move forward," Mr Albanese said.
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It follows the resignation from longtime Labor frontbenchers Brendan O'Connor and Ms Burney, who announced last week they will not to re-contest the next election.
Tasmanian Carol Brown also stepped down as assistant minister while she deals with a health issue.
Speaking to ABC's Insiders prior to the announcement, Mr O'Connor said Mr Giles's performance in the immigration portfolio did not mean he should be dumped from the ministry entirely.
"Some portfolios are very, very challenging, and therefore it's not always fair just to blame the person that sits in that portfolio, because anyone sitting in certain portfolios would find it challenging," he said.
The opposition has fiercely criticised both Mr Giles and Ms O'Neil in recent months, demanding their scalps over the handling of the NZYQ ruling, arguing they should have done more to keep 150 detainees in detention despite the High Court ordering their release.
On Sunday, Peter Dutton described the reshuffle as a sign the government is "in all sorts of trouble".
"It is nothing more than shuffling of deck chairs on the sinking HMAS Albanese," he said.
Meanwhile, Greens housing spokesperson Max Chandler-Mather said he hoped Ms O'Neil's switch to the portfolio would be more than just the prime minister "playing musical chairs with … ministers".
"If all we see from the new housing minister is more of the same small target strategy, the reality is that Labor will be punished at the ballot box by the millions of people across the country right now who are getting smashed by the housing crisis,” he said.
ASIO to be removed from home affairs
Bringing together home affairs and immigration under the control of one minister prompted questions about the workload required of Mr Burke, who will also continue on as the arts minister and leader of the house.
But the prime minister said Mr Burke was up for the challenge and had allocated two junior ministers to support him.
Matt Thistlethwaite will become the assistant immigration minister, while his responsibilities for overseeing Australia becoming a republic have been dropped. Julian Hill will become assistant minister for citizenship and multicultural affairs.
The prime minister also revealed Australia's spy agency, ASIO, will move from home affairs into the attorney-general's department.
ASIO and the Australian Federal Police were moved from the watch of the attorney-general to home affairs back in 2017 when department was created under the Turnbull government.
The AFP was returned to the attorney-general's department just weeks after Labor came to power.
Mr Albanese said it "made sense" to have ASIO and the AFP in one place, and that he discussed it with ASIO director general Mike Burgess.
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