There was no shortage of surprises in Prime Minister Malcolm Turnbull’s shake-up of the federal ministry over the weekend – including the appointment of Melbourne MP Kelly O’Dwyer as Assistant Treasurer, replacing Josh Frydenberg.

Her appointment is not completely out of left-field: in December last year Ms O’Dwyer was appointed parliamentary secretary to former treasurer Joe Hockey. She is also a former chairman of the House of Representatives Standing Committee on Economics.

Before entering Parliament in 2009 she served as an adviser to former federal treasurer Peter Costello from 2004-07, and was later an executive with NAB.

Ms O’Dwyer’s appointment has been widely welcomed – she is one of five women in Cabinet, compared with two under deposed prime minister Tony Abbott – but Mr Frydenberg had been widely tipped to retain his portfolio, even though he was an Abbott supporter.

Mr Frydenberg has instead become Minister for Resources, Energy and Northern Australia.

The inclusion of northern Australia in his portfolio reflects one of Mr Frydenberg’s interests as assistant treasurer.

He spearheaded the Northern Australia Insurance Premiums Taskforce to consider options for reducing home, contents and strata cover premiums in the cyclone-prone region, including a proposal to set up a cyclone mutual or reinsurance pool. An interim report was released last month and a final report with recommendations to the Government is expected in November.

The proposal is contentious. The Insurance Council of Australia (ICA) argues a taxpayer-funded mutual or reinsurance pool would be “an incredibly expensive and unnecessary interference in a functioning market”.

Mr Frydenberg’s move leaves some pet projects without their champion, including reviews of Financial System Inquiry recommendations such as an industry-funding model for the Australian Securities and Investments Commission (ASIC).

A capability review of ASIC – another inquiry recommendation – is under way.

Ms O’Dwyer is also the new Small Business Minister.

Announcing her appointment, Mr Turnbull placed taxation at the heart of her portfolio.

“The Assistant Treasurer is in effect the minister for revenue and is responsible for the tax system, which is at the very centre of our whole productivity agenda, indeed at the very centre of the small business agenda,” Mr Turnbull said on Sunday.

“It is vital we have a tax system that is fair, efficient and creates the right incentives so we can get the gains in productivity we need.”

ICA has welcomed the “new Treasury team”, which includes Alex Hawke as Assistant Minister to the Treasurer. (Mr Turnbull has replaced the parliamentary secretary designation with assistant minister.)

CEO Rob Whelan says the new line-up has “strong policy experience and will be well-equipped for the economic challenges ahead”.

“This is an energetic team and the insurance industry is encouraged that these ministers have the drive and ambition to complete some of the necessary reforms started in the first two years of this Government,” he said. “The insurance industry looks forward to strengthening its relationship with [Ms] O’Dwyer on key policy issues, in particular the Government’s response to the Financial System Inquiry and the long-overdue reform of taxation.”

ICA has also welcomed the creation of a cities and built environment portfolio, under Jamie Briggs.

“This is recognition that the growth and sustainability of Australia’s communities deserves its own focus,” Mr Whelan said.

“Insurers have long advocated that communities should be designed to withstand known and anticipated extreme weather conditions and ICA looks forward to speaking to… [Mr Briggs] on these matters.”