Governor-General Sir Michael Ogio on Tuesday opened the ninth parliament of PNG and declared an end to the madcap political turmoil seen since August last year.
In a speech outlining the government's agenda for the next five years, he declared the government would repeal the internationally criticised Judicial Conduct Act, which gave parliament the power to effectively suspend judges.
The government would also scrap an age restriction of 75 years for the prime minister - a law introduced last year to keep 76-year-old, court-backed Sir Michael Somare from retaking the top job.
Sir Michael is now part of Mr O'Neill's government, the pair having reconciled after the election.
"I am happy to say these challenges are now behind us, for the better," Governor-General Ogio said.
"After the events of the past 12 months I am relieved to see parliament is ... intact.
"We must now resolve never to repeat these difficult and challenging times."
The governor-general said the more than 80 MPs who supported Mr O'Neill, of the total 111, had reached an accord in Alotau, Milne Bay, and agreed to a sweeping reform agenda.
The agreement aims to bury the political upheaval that saw Mr O'Neill installed as prime minister in August 2011 and prepare the country for a revenue windfall from massive liquefied natural gas (LNG) projects.
The agenda states it is a priority to ensure the Exxon-Mobil-backed LNG project starts on time for revenue to start flowing from 2014.
The government plans to assume hiring and firing power over senior public servants and will restructure major departments such as national planning, which manages much of the development budget.
The police force is also set for a shake-up - with a new secretary for police to take on some of the police commissioner's administrative responsibilities.
Legislation will be introduced to set up an Independent Commission Against Corruption and strengthen the powers of the government's anti-corruption task force, called Sweep.
MPs have also agreed to reopen all aid posts closed in recent years, open the health sector to public-private partnerships, extend free education to grade 12 students, and introduce IT infrastructure to rural schools.
"In the current coalition government it's been agreed to under the Alotau accord, where MPs have laid down basic conditions of government in the agreement," Attorney-General Kerringa Kua told AAP.
"One of them is to repeal those contentious legislations that were introduced in the past 12 months."
The official opening of the parliament was announced by a boom of cannon as Governor-General Ogio arrived to a full military ceremony.
After inspecting a small platoon of troops he greeted Prime Minister O'Neill, his wife Linda and Chief Justice Sir Salamo Injia.