The former pharmacist-turned-politician will be heading an influential lobby group - the Australian Chamber of Commerce and Industry - whose mission is to represent the interests of small businesses from around the country.

Operating under the slogan ''Small business - too big to ignore'', the group raises the flag for 30,000 business operators. High on the chamber's agenda is the repeal of the carbon tax, promised by Abbott despite the likelihood of a hostile Senate. And penalty rates and the removal of ''red tape'' are perennial complaints from small business operators, themes that are echoed strongly by the chamber.

This message should have a receptive audience with a conservative government, which sees that sector as a traditional ally.

For Carnell, the new job - and the campaign - is a good fit.

''I have run small businesses myself since I was 25 so I know what it feels like,'' she says.

She is prepared to argue forcefully, she knows the PM and has worked at high levels, including with premiers at COAG.

As chief minister, she steered Canberra through the recession induced in the national capital by John Howard's deep cuts to the public service when unemployment reached 8 per cent in the territory.

''Can-Do Kate'' attracts strong opinions and was regularly embroiled in controversy - and is expected to keep debate raging with forthright arguments about penalty rates and red tape.

''There are penalty rates and penalty rates,'' she says. ''If people are working really long hours, then it's quite reasonable for penalty rates to come in. But where people are working a standard week, why would you get paid more for a Sunday hour rather than a Friday hour?

''Paying higher salaries on Saturdays and Sundays when lots of people want to work on Saturdays and Sundays seems to be really counterproductive for productivity in Australia. We want more people in the workforce, we want more women particularly to be able to be in the workforce. Many of them don't have a choice but to work weekends when possibly their partners are at home.''

When John Howard gained control of both houses of Parliament, he dived into his lifelong passion - industrial relations - and went too far on penalty rates with WorkChoices.

Carnell was - and is - a moderate Liberal, who tried to introduce a heroin injecting room trial and championed causes such as voluntary euthanasia and equal rights for same-sex couples. ''There's no doubt that WorkChoices was a step too far,'' she reflects.

''The Australian community reacted quite significantly to a perception that the pendulum went too far in favour of employers, but we have to get it back into the middle. We've got to allow employers to employ, that's the important bit.

''We certainly have to make sure employers are required to do the right thing by employees; we don't want employers behaving in a way that is unfair or unreasonable, nobody wants that. But at the end of the day if we can't increase productivity in Australia, our capacity to make our economy work in the longer term just isn't there.

''It's not me being clever, it's everyone who's ever looked at the Australian economy - you've simply got to get growth in our productivity. We've got to take the shackles off business. What's the other option? I don't think there is another option.''

Back in the day, Carnell was well known as the Red Hill pharmacist, a hard worker and superb networker. She bought three more pharmacies before being elected to the ACT Legislative Assembly in 1992.

Then followed an elevator ride - going up to opposition leader in 1993 and chief minister in 1995. Her term was marked by controversies and she experienced the worst day of her life when the implosion of Canberra Hospital went wrong and a piece of flying metal killed a 12-year-old girl.

The floor fell away in 2000 when she resigned from politics. The issue was the blowout of the Canberra stadium development budget from a projected $12.3 million in public funds and $15 million in corporate donations to an eventual cost of $82 million to the taxpayer.

Faced with the loss of support of two independents required by her minority government to retain power, she chose to resign.

After that she won the position of vice-president of the ACT Liberal Party but was unsuccessful in becoming a senator.

She served as a director of the NRMA, chief executive of TransACT Development, executive director of the National Association of Forest Industries, chief executive officer of the Australian Divisions of General Practice and head of beyondblue.

Carnell is a strong advocate for Canberra, so how worried is she about the economy of the national capital as Abbott prepares to cut back? ''It's really important for Canberra that the ACT Assembly focus on getting business moving in Canberra,'' she says.

''Fundamentally it's about looking at what makes Canberra a good place to do business, a good place to employ and grow in.

''It really does mean the ACT has to be aggressive about the cost of doing business, and I know everyone says that, but it's true. Cutting red tape, getting rid of unnecessary costs, putting in place appropriate incentives to get people to come to Canberra … ''

However, Carnell also believes Abbott must make tough decisions to bring the budget back to surplus.

''We will be looking very closely at the budget and the National Commission of Audit to see where their appetite for real change is and we will be looking for significant appetite,'' she says. ''He has got to make some really tough decisions in getting the budget back on track; a lot of people won't like it, but that's the job.

''I think it would be very disappointing if the government stepped away from those tough decisions … everyone is going to have to share the pain.''