Prime Minister Malcolm Turnbull has hit back at internal detractors, arguing no-one could suggest his new-look ministry was selected "on any basis other than merit".

Newly promoted ministers have been sworn in by the Governor-General at a ceremony in Canberra, while those who were dumped are deciding on their futures.

Mr Turnbull dramatically changed his frontbench on Sunday, adding three women to Cabinet to take the total to five, including making Marise Payne the nation's first female defence minister.

Key points: Hockey, Abbott, Andrews and Abetz to leave frontbench

Hockey, Abbott, Andrews and Abetz to leave frontbench Three women to join Cabinet taking total to five

Three women to join Cabinet taking total to five Speculation Hockey may be appointed as ambassador to Washington

It will be an unfamiliar front bench to many, with MPs including Tony Abbott, Joe Hockey, Kevin Andrews and Eric Abetz all departing, as well as the surprise omission of Bruce Billson.

Mr Turnbull said he selected a ministry that was ready to engage with the future and that meant some people had to go.

"Today we are forming a government for the 21st century. A ministry whose composition and focus reflects our determination, to ensure that Australia seizes the opportunities of this the most exciting times in human history," he said at the ceremony.

He rejected internal Liberal Party concerns his allies in the leadership coup were rewarded for their roles.

"No-one could suggest that this Cabinet, this ministry has been assembled on any basis other than merit," he told the AM program this morning.

"It's very tough to make those calls but that's what leaders have to do. You have to have turnover and renewal," he said.

Mr Turnbull has acknowledged Mr Abbott would be reeling from the events of the past week.

"I feel for Tony," he told Channel Nine.

"I've got a pretty good understanding of what he's going through. It's a rotten time and he will need lots of support.

"But the show has to go on, this is the Government of Australia."

Speculation Hockey may take ambassador position

For Mr Hockey, it is the end of a 20-year career.

After an agonising week of speculation that he would lose his job as Treasurer, he told Mr Turnbull yesterday he would not seek a front-bench job and would quit Parliament in due course.

However, there are rumours of a new job coming soon.

"I believe he has a further contribution to make in our nation's service," Mr Turnbull said, without giving further details.

Independent senator Nick Xenophon said he suspected that could mean an appointment as ambassador to Washington as Kim Beazley's successor.

"There's going to be a vacancy in Washington soon for Australia's ambassador to Washington," he said.

"I can think of many people who would be much worse than Joe. I think Joe, if he was going to take up a diplomatic position, would actually do Australia proud."

Mr Billson, the outgoing Minister for Small Business, said he was reflecting on the next stage of his political career with his family and support network.

"I had hoped to continue my full contribution leading the Coalition's work on energising enterprise through excellent policy and advocacy on behalf of Australia's small businesses and family enterprises," Mr Billson said in a statement.

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"Having made this ambition clear, Prime Minister Turnbull and I spoke [on Sunday] and I was advised that I would not be provided that opportunity."

Mr Abetz has been dumped as Employment Minister. He wrote on Facebook that he was disappointed not to be included in the new Cabinet but said he had always put his role as a Liberal senator for Tasmania first and he looked forward to continuing to do so.

Payne makes history as first female defence minister

His Senate colleague Senator Payne will make history when she is sworn in as the first woman to be Australia's defence minister.

Five women now in Cabinet Foreign Minister Julie Bishop

Foreign Minister Julie Bishop Health Minister Sussan Ley

Health Minister Sussan Ley Defence Minister Marise Payne (pictured)

Defence Minister Marise Payne (pictured) Employment Minister, Minister for Women Michaelia Cash

Employment Minister, Minister for Women Michaelia Cash Assistant Treasurer, Small Business Minister Kelly O'Dwyer

New South Wales senator Arthur Sinodinos told Sky News her appointment had a message.

"It is a big challenge but she was up for it and she wanted it, and if we win the next election there would be continuity because I would imagine that she would continue to be the defence minister," Senator Sinodinos said.

"So we are investing in someone who can be there for the longer term."

Senator Sinodinos said the military had made a lot of progress as an example to the rest of society about what happened when glass ceilings and other barriers were smashed.

He said Senator Payne partly symbolised that change but that should not take the focus off the important work she and others in the National Security Committee would have to do.

Senator Sinodinos will be Cabinet secretary, despite being called to give evidence to the NSW Independent Commission Against Corruption.

He said he would not have made himself available for the Cabinet if he did not think he could deal with whatever emerged from that process.