"They have had four years to make a great contribution. They have been good ministers but I want to give other people a chance.
"For National it is very important that we have constant renewal, that there are fresh faces coming through."
It was also important for National's longevity, he said, to have that mix of people with experience and to provide opportunity for others.
"If I was to look back to Helen Clark's time as Prime Minister, I don't think she renewed her Cabinet terribly well very often, and only by necessity." That left Labour in disarray for the past four years.
"I am very committed to making sure there is a strong breadth and depth of talent at various different stages of their development coming through Cabinet."
Kate Wilkinson and Mr Heatley had both been disappointed but had pledged to remain "team players" from the backbench and they understood his thinking.
Amy Adams and Mr Bridges, both tipped as potential leaders, are among those who have been promoted.
Two new ministers were named: National's senior whip, Michael Woodhouse, outside Cabinet and Nikki Kaye straight into Cabinet.
Mr Woodhouse's whip's role is likely to be taken by Taupo MP and junior whip Louise Upston when the party caucus meets next Tuesday.
Hamilton West MP Tim Macindoe is tipped to become junior whip.
His and Ms Kaye's appointment will leave vacancies on two select committees, education and justice and electoral.
Nick Smith has been returned to the Cabinet. He resigned last March after the Herald revealed he had written a testimonial in 2010 supporting a friend's ACC claim - at the time he had been ACC Minister.
But he has not got back his old jobs, Environment and Local Government.
He has Conservation and Housing and Mr Key indicated Dr Smith would be assuming responsibility for housing affordability, an issue Finance Minister Bill English has been leading, not just state housing.
Mr Key said Dr Smith would be working with local governments on housing affordability issues.
"He's a guy with lots of energy and ideas and he doesn't leave too many stones unturned. I think we can see in the housing sector him thinking right across the spectrum and working with a lot of different ministers to get results."
David Carter is set to be elected Speaker next Thursday to replace Lockwood Smith, who is leaving to be High Commissioner to London.
Mr Key defended his decision to keep Education Minister Hekia Parata in place despite the major upheavals of last year, including class sizes and Christchurch school restructuring.
She had been in her job for only a year, he said. She had made mistakes but she had got a lot of things right. "I am very confident she is going to make it. There are one or two minor issues but there is a huge amount of talent there.
"She has got a new chief executive [Peter Hughes], she has got a new associate minister [Nikki Kaye], one of the big issues would be handled by Steven Joyce, it's a new year."
Mr Joyce will take responsibility for the Novopay teacher-pay debacle, with Mr English. "If I were the providers of that system," said Mr Key, "I'd be on notice."
Winners and losers
Winners
*Michael Woodhouse From Chief Government Whip to minister outside Cabinet with Veteran's Affairs, Immigration and Associate Transport (Road Safety). A low public profile but quiet achiever who has been destined for promotion.
*Nikki Kaye Catapulted straight into Cabinet from the backbench with a new delegation, digital education. But the casework around Associate Immigration will keep her grounded. Has also picked up Youth Affairs and Civil Defence.
*Simon Bridges The trainer wheels are off for the MP for Tauranga often tipped as a future leader. promoted from outside to inside with the weighty portfolio of Energy and Resources, high on the Government's agenda, and Labour, which needs a deft hand in the wake of Pike River.
*Nick Smith Back in Cabinet but with new portfolios. Conservation a good fit for his environmental bent but Housing will be the bigger challenge with Labour making strides in the area and housing affordability a growing concern.
*Nathan Guy The Otaki MP and former farmer has got what he has always wanted, Agriculture, or these days it's called Primary Industries.
*Chris Tremain Has added the challenging portfolio of Local Government to his Internal Affairs, which is a vote of confidence in him, given the prickly politicians he has to deal with and opposition to reforms introduced by former minister Nick Smith.
*Jonathan Coleman One of John Key's favourites, the Defence Minister was promoted up the ranks at the start of the second term in 2011 and again yesterday from 13 to No 10.
*Amy Adams Started National's second term at last in Cabinet at 20 and Internal Affairs. Is now No 15 with more meaty Environment and and has jumped over Craig Foss and Nathan Guy.
Losers
*Phil Heatley Not a disaster but not great. Services as a minister no longer required. A blow for the MP for Whangarei but not likely to dent his cheerfulness.
*Kate Wilkinson Resigned as Labour Minister following Pike River report but would have been asked to go anyway, says Key. Mediocre.
*Craig Foss The Commerce Minister's part-time job of Associate Education turned out to be a nightmare with its responsibility for Novopay teachers' pay debacle. Super Minister Steven Joyce now gets Novopay, which doesn't say much for Foss' handling of it.
Sideways
*David Carter From Primary Industries to Speaker's position, due to be elected Thursday next week.
