But the Education Minister, Peter Garrett, would not say whether teachers should be paid more in return for lifting children's performances.

''The issue of their remuneration is a matter for their employers,'' Mr Garrett said.

The Prime Minister, Julia Gillard, announced yesterday that she would introduce legislation by the end of the year to overhaul federal school funding arrangements, which will aim to raise the performance of Australian students to the top five countries for maths, science and reading by 2025.

Australian students are ranked seventh at reading and science and 13th at maths.

Ms Gillard said improving teacher quality would be central to meeting these results.

''Under our plan, you will need to be at the top of your class to get into a university teaching class,'' she said.

''Nothing matters more to the quality of a child's education than the quality of the teacher standing in front of the classroom.''

This represents a shift from the government's reforms, fully implemented this year, which made university entrance rankings a demand-driven system rather than capped places.

In February, the Gonski review panel handed its education funding report to the government, recommending an urgent $5 billion investment in government, private and Catholic schools, in 2009 dollars. This equates to about $6.5 billion in today's terms.

Ms Gillard, who will begin another round of negotiations with the states and territories, would not be drawn on how much the government would ask them to spend.

Under the new model, government schools - which educate the most disadvantaged, disabled and Aboriginal students - will receive higher rates of funding.

A new ''dollars follow the child'' scheme will introduce a base funding rate for all students, whether at government, private or Catholic schools, with additional loadings to address disadvantage.

Both promises are central tenets of the Gonski review, but the government said yesterday that loadings would go to children in the lowest 50 per cent of socio-economic disadvantage, rather than the 25 per cent recommended in the Gonski review. This would give an extra 875,000 children support.

The report's author, David Gonski, welcomed Ms Gillard's reform plans, calling them a ''historic step forward''.

''There is no doubt that, unless all governments are prepared to step up to the mark and make the necessary investment and deliver other reforms, and unless education sectors can overlook their differences and act cohesively for the good of all students, Australia's schooling system will continue to drift and we will fall further behind the rest of the world,'' he said.

The opposition's education spokesman, Christopher Pyne, said the announcement was ''all feathers, no meat''.

''Julia Gillard is asking voters to trust a funding commitment made today that won't be fully in place until 2020, which is three federal elections away,'' he said.

The independent MP Rob Oakeshott praised the reforms, and urged the Opposition Leader, Tony Abbott, and Mr Pyne to ''rethink their love affair'' with the existing funding formula.

''The disadvantage is real, and Australia's current funding formula entrenches this disadvantage,'' Mr Oakeshott said.

The executive director of the Independent Schools Council, Bill Daniels, said the lack of detail was concerning but the PM's speech was a positive start and the long implementation time frame understandable.

''You can't just switch funding off and on,'' he said.

The federal president of the Australian Education Union, Angelo Gavrielatos, said states or territories that refused to sign on were sending a message that ''they don't value the education of their children in their state''.

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