SARAH FERGUSON, PRESENTER: Christopher Pyne is the Education Minister. He joined me tonight here in Canberra.

Christopher Pyne, welcome to 7.30.

CHRISTOPHER PYNE, EDUCATION MINISTER: Thank you, Sarah.

SARAH FERGUSON: Now the unity ticket that you had with Labor before the last election on Education funding is now officially over. How do you expect the states to find the money to fund those school improvements that you were both in favour of?

CHRISTOPHER PYNE: Well the unity ticket in fact is entirely in place. I hate to disagree with you so early in the interview, but we promised that we would fund the school funding model over the forward estimates, over the four years of this funding agreement and that's exactly what we've done.

SARAH FERGUSON: Except that I think that what people understood from the unity ticket was that you shared the view that those improvements to schools, particularly lower-performing schools, that was an idea, a concept and funding that you supported. People didn't understand from that that you were going to disappear from that system four years later.

CHRISTOPHER PYNE: Well we're not. So, the new school funding model remains in place for four years, as we promised before the election. In fact, ironically, we're putting more money in to school education than Labor would have, because Bill Shorten took $1.2 billion out in the pre-election fiscal outlook. So, we're delivering $18.1 billion for schools in 2017. Beyond that, we haven't said for a moment that the model will change. It will continue to be a needs-based model with loadings for things like disability and other disadvantage. It will increase year-by-year by CPI plus enrolments based on the base figure in 2017. So in fact the new school funding model will continue into the future and be fair to all.

SARAH FERGUSON: But the ramp up, the big ramp up to fund the Gonski reforms as they were laid out in the report, that money is not there after the forward estimates.

CHRISTOPHER PYNE: Well Labor was never implementing the Gonski model because the Gonski model was $114 billion over 10 years and not even Labor was pretending that they could do that. The extra money that they used to promise was a blue sky promise that they know they could never have delivered. And if they promised to deliver it now, the question will be to them: well where is the money coming from?

SARAH FERGUSON: Well let's talk about the $80 billion that your government has decided to remove from the states over 10 years. Part of that is Education funding - it's Health and it's Education. How do you think the states are going to replace that money without coming to you and asking for a raise in the GST?

CHRISTOPHER PYNE: Well Colin Barnett got it right today. He said the states run public hospitals, the states run public schools. In the Budget last night, their funding for the next four years was locked in place.

SARAH FERGUSON: We're talking about the $80 billion over 10 years.

CHRISTOPHER PYNE: Yes, but no treasurer ...

SARAH FERGUSON: They say they can't afford to run those schools and those hospitals without that money, so what is it that you're trying to achieve by making such a large cut over the 10 years?

CHRISTOPHER PYNE: Well, we're not making that kind of cut because no state treasurer worth their salt would have banked their house on blue sky promises that the Labor Party put into the budget 10 years from now.

SARAH FERGUSON: Do you think that those state treasurers at the same time expected to see a Liberal government deliver them an $80 billion cut?

CHRISTOPHER PYNE: Well I think Colin Barnett got it right today. He's not ...

SARAH FERGUSON: And what about the other premiers, did they get it right as well?

CHRISTOPHER PYNE: Colin Barnett is not complaining because Colin Barnett makes the both - quite sensible point that the states should be responsible for their schools and for their hospitals and they have a four-year funding agreement which is locked in place in the Budget last night. It shows an increase in spending in my portfolio, a very substantial one at that. Delivers more than Labor would have delivered and I don't think the public out there believe that Labor's blue sky promises from the past, 10 years from now ...

SARAH FERGUSON: OK, we've heard about the blue sky promises. We have rules about repeating lines. That's just not on.

CHRISTOPHER PYNE: Well, we should have rules about repeating the same questions then.

SARAH FERGUSON: Well, this isn't the same question. You've just mentioned the Premier of WA, but we've heard from the premiers of Victoria, of NSW and Queensland, who say they cannot afford to run their schools without that money and they weren't expecting anything like that $80 billion cut that you delivered them.

CHRISTOPHER PYNE: Well you've just repeated the same question and my answer remains the same, but at risk of repeating it, I'll move onto a different subject.

SARAH FERGUSON: No, because I'm asking you about the criticism from those premiers. You've only talked about Colin Barnett. They are hugely critical of that move. So, let me ask you a slightly different question: was this a wedge to get the states to come to you for a raise in the GST?

CHRISTOPHER PYNE: Of course not. We want to treat the states like adult sovereign governments and I think they should want to be treated that way. Now, they run their own schools, they run their own hospitals, they need to find their own revenue measures if they believe that they don't have enough funds to do so. I think that the ...

SARAH FERGUSON: What are you suggesting there? Are you suggesting some income tax raises, as was suggested in the Commission of Audit, perhaps, for the states?

CHRISTOPHER PYNE: No, I'm not suggesting that. It's entirely a matter for the states and territories because, Sarah, they're adult governments and they need to be treated like adult governments.

SARAH FERGUSON: But they don't have access to that sort of revenue. What are you actually saying there? I don't understand what form of revenue you think the states can get their hands on to make up that shortfall?

CHRISTOPHER PYNE: Well I'm not a believer in infantilising the states and I think Colin Barnett takes the right attitude in WA about the responsibilities that he has as a premier.

SARAH FERGUSON: Nonetheless, you haven't provided an answer on the revenue. You're saying they need to be adult and not like children, but they still need money to pay for those things. Where is that money coming from?

CHRISTOPHER PYNE: Well that's a matter for the state treasurers.

SARAH FERGUSON: I'm sorry, but we are going to stay with this because what you're doing is you're saying that the states and the territories should be adult, they should find some money, but as you well know, there is no money, there is no alternative stream of revenue. So what is it exactly that you're talking about?

CHRISTOPHER PYNE: Well, Sarah, I'm not going to let you try and put words in my mouth or try and fluster me on television, which is obviously what you're trying to do 'cause that's you're interviewing style.

SARAH FERGUSON: Far from it, I'm simply asking - no; far from it. I'm simply asking for a proper answer to the question.

CHRISTOPHER PYNE: And I've given you one.

SARAH FERGUSON: You say revenue. What is that form of revenue that the states can get access to?

CHRISTOPHER PYNE: The states and territories have many sources of revenue that they can decide to either increase, to decrease, to create new sources, if that's what they decide, or they can cut their cloth to suit their circumstances.

SARAH FERGUSON: What sort of sources? I'm just asking you to be specific. Give me an example.

CHRISTOPHER PYNE: I'll leave that up to the states and territory treasurers to determine their best taxing methods. I'm not a state and territory treasurer, I'm the federal Minister for Education and I thought you wanted me to come on the show and talk about higher education reform, but clearly I was wrong about that.

SARAH FERGUSON: Now we spent so long about this because this was a measure of your treasurer, your government in last night's Budget, but we did want to talk about reform of the universities.

CHRISTOPHER PYNE: I think you've run out of time!

SARAH FERGUSON: No, I think we've got enough time just to talk about the fact that we are now talking about universities being freed up to charge their own fees. How high could those fees go?

CHRISTOPHER PYNE: Well that'll be a matter for the universities to determine and obviously the market will ensure that those prices reflect what students are prepared to pay. Now the great thing about our reforms in higher education is that it massively expands the number of students that will be able to access higher education. So we're bringing the demand-driven system to diplomas and associate degrees, giving 80,000 more students an opportunity to go to university in these pathways programs. That's coupled, of course, with a new trade support loan program, which will mean that apprentices will have a great deal more support like higher education students have had, so we're expanding the opportunities to low socio-economic status students and students with potentially low ATAR scores to get a university education and we're going to have the biggest Commonwealth scholarships fund in Australia's history. So, this is a great news story for people who want to have the opportunity to go to university. They'll earn 75 per cent more than people who don't have university degrees and they can borrow every dollar from the taxpayer, whatever the fees.

SARAH FERGUSON: But just briefly, in terms of how high those fees could go, because surely if these fees go up to, say, $100,000 or even $200,000 for a medical or a Law degree at one of the top universities, that's going to be a disincentive for people from lower - people from lower income families who may not have access to one of those scholarships you talk about.

CHRISTOPHER PYNE: Well there's absolutely no evidence for that whatsoever. The evidence indicates that students don't like paying fees, they don't like having to borrow from the taxpayer and pay it back later when their income is over $50,000, but it does not deter them from going to university. In fact we have record numbers of students at university. 577,000 students are doing higher education in Australia. So, this system's been in place for many years. It has had no impact on students going to university because they know they can borrow every dollar and they start paying back, Sarah, at two per cent of their income when they earn over $50,000 a year.

SARAH FERGUSON: Christopher Pyne, that's all we've got time for and I hope you're not flustered, but thank you very much for coming in.

CHRISTOPHER PYNE: I don't feel flustered. It's a pleasure to be with you.

SARAH FERGUSON: Thank you.