Welcome to Lateline.

CHRISTOPHER PYNE, EDUCATION MINISTER: Steve, good to be with you.

STEVE CANNANE: Did you and the Prime Minister mislead the Australian people at the last election?

CHRISTOPHER PYNE: On what issue?

STEVE CANNANE: On the issue of Gonski?

CHRISTOPHER PYNE: Of course not. What we've announced today is that we are going to keep our promises. We promised that we would do two things: we've got exactly the same funding envelope as Labor across the forward estimates; and we would change the school funding model to remove the command-and-control features from Canberra. And that's exactly what we're going to do.

The shock that we've had before and since the election is that Bill Shorten ripped $1.2 billion out of the forward estimates in this school funding model. Bill Shorten as the Minister for Education planned to take money away from Western Australia, Queensland and the Northern Territory to the tune of $1.2 billion.

So he thought a good model was having five jurisdictions getting more money than three jurisdictions. He wanted a child in New South Wales or Tasmania or South Australia to be paid more by the Commonwealth Government than a child in Western Australia, Queensland and the Northern Territory.

STEVE CANNANE: Okay, I'll come back to the $1.2 billion in a moment, but let's talk about the promises that you and the Prime Minister made in the last election campaign. Tony Abbott said, "Kevin Rudd and I are on a unity ticket. There is no difference between Kevin Rudd and myself when it comes to school funding."

CHRISTOPHER PYNE: Correct.

STEVE CANNANE: You yourself said, "You can vote Liberal or Labor and you will get exactly the same amount of funding for your school." And you also said that you agreed to the Government's school funding model. Why haven't you stuck to those promises?

CHRISTOPHER PYNE: Well, you have to read all the quotes before the election, Steve, and what you've just quoted back to me is exactly the truth. We said that there was a unity ticket between the Labor Party and the Liberal Party on school funding and there is.

STEVE CANNANE: On the model?

CHRISTOPHER PYNE: Bill Shorten reduced the school funding model to $1.6 billion. Bill Shorten and the Labor Party ripped $1.2 billion out of the forward estimates. But I always said that we would improve the model because we didn't like the command-and-control features from Canberra, we didn't like the heavy regulation, the unnecessarily prescriptive nature of the Labor Party's school funding model.

We didn't want to infantalise the States. We want to treat the States and Territories like adults because they own and operate every public school in Australia.

STEVE CANNANE: Okay, but the model you agreed to is a needs-based funding model.

CHRISTOPHER PYNE: Sure.

STEVE CANNANE: It's not just about the amount of funding or the funding envelope that you talk about. This is a fundamental principle of this model. If you change that, you change the policy that you took to the last election?

CHRISTOPHER PYNE: But who's suggesting that we're not going to have a needs-based funding model?

STEVE CANNANE: Okay, let me put it to you this way: There's 2,000 schools in NSW that have got more funding under the model that's been negotiated between the Commonwealth and that State. Will the model that you will negotiate in 12 months' time keep all that same funding to those 2,000 schools that are better off?

CHRISTOPHER PYNE: And 200 schools in NSW lost money under this school funding.

STEVE CANNANE: True, but 2,000 is a lot more than 200, isn't it? There's a lot more schools better off under this model.

CHRISTOPHER PYNE: Julia Gillard promised that no school would be worse off under this model but in NSW alone 200 lost money.

STEVE CANNANE: Okay, but you're now the Government. Will you maintain that those 2,000 schools in NSW under the agreement that you negotiate will continue to be better off?

CHRISTOPHER PYNE: Well, of course we will have exactly the same funding envelope that Labor promised.

STEVE CANNANE: But what does a "funding envelope" mean? That's the funding, isn't it, not necessarily the model?

CHRISTOPHER PYNE: Well, we're not committed to a bad model and I said that before the election. If you look at every single one of my public statements before the election, I said that the model itself was too prescriptive, had too many command-and-control features from Canberra, was overly regulatory and established another new institute at taxpayers' expense and all this could be swept away. Because what we wanted to have was a simpler, fairer model that was equitable between all the States and Territories and students.

But we also said we'd keep the same funding envelope and that is what we're delivering. The same funding envelope but a much better model that is fair to everyone, because I'm a National Minister for Education. I'm not the NSW Minister, I'm not the Tasmanian Minister, I'm the National Minister and therefore, as a father of four children myself, I don't believe that one child in one State should be treated differently to a child in another State simply because Bill Shorten decided to rip $1.2 billion out of the system.

STEVE CANNANE: Okay, let's talk more about that $1.2 billion that Labor saved as a result of not striking deals with WA, Queensland and the Northern Territory. When did the Coalition find out about that?

CHRISTOPHER PYNE: It was in PEFO but it was reasonably well hidden in PEFO and the economic statement that Chris Bowen handed down on August the 2nd didn't even mention the fact that $1.2 billion was to be ripped out.

STEVE CANNANE: So when did you find out about it?

CHRISTOPHER PYNE: That had to come out in PEFO.

STEVE CANNANE: So when did you find out about it?

CHRISTOPHER PYNE: Well, I read it in PEFO but I was surprised and believed that post the election we could make sure that money was put back.

STEVE CANNANE: And when did you read that, in August?

CHRISTOPHER PYNE: The truth is: when I realised post the election that the $1.2 billion had been taken as a saving by Bill Shorten, the whole game changed.

STEVE CANNANE: But didn't you realise during the election that that happened? Because Joe Hockey on 'Q&A' mentioned it. He said that $1.2 billion had been taken out.

CHRISTOPHER PYNE: But I'd hoped, fervently hoped, that post the election we'd be able to find $1.2 billion and that the Government hadn't really, couldn't really, seriously, possibly have made a $1.2 billion of savings off the back of school students around Australia. But Bill Shorten did just that. He has left us a shambles and it's my responsibility to fix it and I intend to do so.

STEVE CANNANE: Okay, but it was reported in the newspaper on August 13. Joe Hockey mentioned it in that debate, yet during the campaign you continued to say that you would be promising $2.8 billion of new money to the reforms, the new reforms?

CHRISTOPHER PYNE: I always hoped that the $2.8 billion would be there post the election. After my briefings with Treasury, with Finance, with the Department of Education, it became quite apparent that Bill Shorten hadn't just taken the money out in PEFO, they'd banked it as a saving.

STEVE CANNANE: But didn't you know it was off the books? Joe Hockey seemed to be admitting that during that interview on 'Q&A'.

CHRISTOPHER PYNE: Steve, they were prepared to rip off school students in WA, Queensland and the Northern Territory. I'm not prepared to do that.

STEVE CANNANE: Okay, so are you now going to shrink the funding envelope to the States who signed up to Gonski? Will you be spending $1.6 billion across all the States, those who signed up and those who didn't?

CHRISTOPHER PYNE: No.

STEVE CANNANE: Okay, so do we know what kind of figure that will be, then?

I will have announcements to make about that in the coming days and weeks so that there's a fair and equitable treatment of Western Australian, Queenslander and Northern Territory students.

STEVE CANNANE: So the States who signed up to Gonski will get that $1.6 billion?

CHRISTOPHER PYNE: Correct.

STEVE CANNANE: Okay. Barry O'Farrell said today when you move into Government you've got to stop behaving like an opposition. That's a pretty damning assessment of the way you've handled this from a senior leader of your party?

CHRISTOPHER PYNE: Look, Barry's a very good friend of mine. He's a personal friend. I've known him for years.

STEVE CANNANE: So that makes it worse, doesn't it?

CHRISTOPHER PYNE: Well, look, he's entitled to fight for NSW. You'd expect him to do so. But I'm not the Minister for NSW. I'm the Minister for Australia. I'm the Minister for students right across the country from Darwin to Tasmania, from WA to Brisbane and I have to make sure there's a school funding model that's fair to everybody, not just fair for those States that signed up to the Labor Party's model before the election.

STEVE CANNANE: Okay, and there's four of those States and they all insist the agreements for funding have already been signed off on and that they must be honoured. Have you got advice whether these agreements are legally binding?

CHRISTOPHER PYNE: No, they're not legally binding. But that's really a technical point.

STEVE CANNANE: Who has given you that advice?

CHRISTOPHER PYNE: Well, people that you'd expect me to get it from in the Australian Government. But the point is that really isn't the issue. I mean, Victoria didn't sign their bilateral agreements with the Commonwealth, Tasmania didn't sign their bilateral agreement. So technically they're non...

STEVE CANNANE: They still think they're agreements. They consider them deals?

CHRISTOPHER PYNE: They might think they are but they're non-signatory States because they didn't sign bilateral agreements. The National Catholic Education Commission didn't sign bilateral agreements but all of that is effectively splitting hairs. What do we have to do in Australia? We have to have a school funding model that ensures that every child is treated fairly and we have to focus on things we know will bring about good teacher outcomes.

We could have this argument about school funding until the cows come home but the most important thing we can do is bring about better outcomes for our students.

STEVE CANNANE: You've said the funding model doesn't work, if that's the case, why would the Liberal NSW Premier Barry O'Farrell say today, "It's going to deliver better outcomes and a better Australia" and why would his Minister for Education, Adrian Piccoli, say, "We've implemented it; it works; it's understandable; it's transparent"?

CHRISTOPHER PYNE: Well, let me tell you a few things about the Shorten shambles that I've been left as the Education Minister. Firstly, we were told five jurisdictions had signed up to it plus the Catholics. Now we discover that, in fact, only three jurisdictions have signed up to it and the Catholics hadn't.

STEVE CANNANE: If it's such a shambles, why are these States happy with it? Why do they want the deal to continue?

CHRISTOPHER PYNE: Well, Steve, if I can finish about the shambles that I've been left by Mr Shorten. Secondly, it only applies to 900 schools around Australia. The only place where this model applies in its purest form is the 900 independent schools in Australia.

Every State and Territory has their own model and that's why in NSW, when they announced their application of the model, their NSW application of the model, 200 schools got less money and in fact the side deals that Julia Gillard and Kevin Rudd did with a number of States and Territories meant the system was entirely bastardised to the point that there is no national school funding model.

As well as that, it's entirely incomprehensible and Bill Shorten has ripped $1.2 billion out of the funding model. So it's not a great model to go forward with and I would be irresponsible as Education Minister to implement something that I know is incapable of being implemented.

STEVE CANNANE: Well, a model that you seemed to endorse today was the old Howard Government model, the SES model. You said, I believe, that the school funding model that was implemented by the Howard Government is a good starting point for a school funding model. Why did you not argue that during the election campaign?

CHRISTOPHER PYNE: I always have. The SES...

STEVE CANNANE: In the election campaign you weren't saying that?

CHRISTOPHER PYNE: The SES funding model was a needs-based model based on objective data and that's what we want to have. We need objective data. We need it to be needs-based. Just like the Gonski report.

STEVE CANNANE: But if you'd brought that up during the election campaign you could have had a debate between Labor's model, the Coalition's model. People could have weighed that up and made a decision about which model they thought was better?

CHRISTOPHER PYNE: But unfortunately, we didn't know until now, until recent weeks, that the Shorten shambles is as bad as it is. We didn't know how incomprehensible the guidelines were. We didn't know that it only applied to 900 independent schools. We didn't know that Victoria, Tasmania and the Catholics never signed on the bottom line.

Bill Shorten governed by press release. He didn't govern by good policy. It was all spin over substance and he's left me holding the baby. Now I'm happy to hold the baby because we're in Government but I've got to make the decisions that delivers a fair funding model.

STEVE CANNANE: Okay. Kathryn Greiner, for example, thinks the Gonski model is the right model. She was on the review committee.

CHRISTOPHER PYNE: Of course she would say that, wouldn't she, because she was on the review committee, so I accept that.

STEVE CANNANE: And she was one of the members who spent a lot of time coming up with those conclusions. She described the SES model which you seem to be endorsing as opaque, not transparent, confusing, it was in fact a beggar's muddle.

CHRISTOPHER PYNE: That's how I would describe the model the Labor Party has left me with. It's not a good situation to be in. Now Kathryn Greiner and Peter Tannock and David Gonski, all members of the Gonski panel, I've met with them and discussed this with them. We want to make sure that we have a fair model for everyone, that is equitable across the States and Territories, that doesn't rip money away.

STEVE CANNANE: When did you meet with those people?

CHRISTOPHER PYNE: Over the last 12 months.

STEVE CANNANE: Why won't you meet with them again? Because they're asking you to go and meet with them.

CHRISTOPHER PYNE: Well, I don't mind meeting with the members of the Gonski panel. But the public elected the new Government to get on with the job and that's what I have to do.

STEVE CANNANE: So you're happy to meet them in the next week?

CHRISTOPHER PYNE: Look, meeting with members of the Gonski panel is not a problem. I mean, it was misreported today by the newspapers saying that I said I was too busy. I never said any such thing. It's just very bad reporting. But I did say that I'm getting on with the job because that's what the public expect us to do.

STEVE CANNANE: Do you believe that there is a problem with equity in Australian schools?

CHRISTOPHER PYNE: Well, the OECD says that we are a high equity nation in terms of our students.

STEVE CANNANE: So what do you believe? Is there an equity problem or not?

CHRISTOPHER PYNE: I don't believe there is an equity problem in Australia. I think we are very generous to our students in public and non-government schools as a wealthy country like Australia should be.

STEVE CANNANE: So if you don't believe there is an equity problem, given the Gonski review is all about improving equity in Australian schools, is it fair to say you never believed in Gonski?

CHRISTOPHER PYNE: I think Gonski should be about improving the quality of our students' outcomes.

STEVE CANNANE: But Gonski was mostly about equity. Does that mean you never believed in it if you don't think there's an equity problem?

CHRISTOPHER PYNE: Steve, you're the first person who has described the Gonski report as being all about equity. The Gonski report was about a new school funding model. It was supposed to be about high-quality outcomes for our students. If it was all about equity then that is news to most people.

STEVE CANNANE: At one stage you called it "con-ski." Was the real con that you pretended to the Australian public at the last election that you believed in the model that Julia Gillard endorsed?

CHRISTOPHER PYNE: I think there are very good elements of the Gonski report. I support a needs-based funding model, as the SES funding model was. I think it should be based on objective data and the Gonski report recommended we use the SES funding model data because it was the most objective.

I believe we should support more funding for children with disadvantage, whether it's a disability, whether it's low SES, Indigenous children in remote schools or small schools. Of course we should support those children more. That's axiomatic.

There are some children in Australia, Steve, that we spent $60,000 on. Sixty-thousand dollars. And so the problem in Australian schooling is not the funding; it is the focus on money rather than the focus on what we are teaching our children, how we are teaching them and the kinds of outcomes we're trying to achieve.

And I think parents want us to focus on teacher quality, on the curriculum, on engaging parents rather than dissociating them from education and on principal autonomy or more local controls.

STEVE CANNANE: Christopher Pyne, we've run out of time. Thanks very much for coming in.

CHRISTOPHER PYNE: What a pity. Thank you, Steve, for having me.