Public schools in some states and territories could face funding cuts if the Turnbull government’s Gonski 2.0 plan is blocked because they do not have binding agreements locking in yearly increases, Simon Birmingham has warned.

Speaking to Guardian Australia’s politics live podcast, the education minister suggested the government could revert to funding levels in last year’s budget and noted it was not bound to increase funding in all cases, although that is not the preferred option.

His comments raise the prospect that if the bill were blocked state schools in Queensland, Victoria, Western Australia, Tasmania and the Northern Territory could face frozen or lower funding growth than states with binding agreements. The Australian Education Union has labelled the suggestion a threat to students’ futures.



But while signalling the government’s intention to play hardball, Birmingham has left the door open to striking deals with the crossbench and Greens to get the bill passed, including through increased funding.

On Tuesday the Greens’ education spokeswoman, Sarah Hanson-Young, suggested her party would investigate blocking the Gonski 2.0 bill to rely on default rates of funding growth in the current law as a third way through the funding debate. Birmingham responded that blocking the bill would hurt public schools.

Asked on the podcast if all sectors would be worse off or if some sectors, including the Catholic system, could benefit if the bill were blocked, Birmingham said “it depends” on decisions the government would then make.

“If our legislation doesn’t pass, then we’ll have to contemplate what it is that we are required to do under the [current] legislation,” he said, adding the government policy would have to go back to cabinet.

“The current legislation is not as prescriptive as many people think it is and doesn’t bind us in as many ways as people think that it does.”

He said the Gonski 2.0 bill would commit to future funding increases but: “We’re not bound in as many prescriptive ways by the current act ... to deliver higher levels of school funding.

“Of course much of the spending was based on the 2013 agreements, which only a handful of states signed, and which we’ve been clear ever since the 2014 budget, would come to an end at the end of this calendar year.”

The Australian Education Act grants 4.7% funding growth to schools that are not yet at their resource standard, including all state schools. Those already above the standard receive 3% a year growth.

However, only New South Wales, South Australia and the Australian Capital Territory have binding agreements which guarantee their public schools yearly funding increases under the act. The other states receive the same rates, but that could be revoked or altered at the minister’s discretion. Non-government schools are guaranteed indexation.



Birmingham stressed that last year education department officials had told Senate estimates “the government could live within the budget we had last year under the current legislative arrangements”, suggesting that even without the extra $2bn over four years – or $18bn over 10 – in Gonski 2.0 the government could meet the requirements of the act.

The Australian Education Union’s president, Correna Haythorpe, said: “Those kinds of threats really show us [the government’s] true hand – that minister Birmingham would be willing to punish our children if they don’t get their way in parliament. It’s a ridiculous situation.”

Haythorpe said the Turnbull government should make sure every state received funding levels promised in Gonski needs-based agreements.

“If the government wants to hold schools to ransom, they will have to answer to the electorate, their school communities and the parents of children their future they’re disregarding,” she said.

The National Catholic education commission director, Ross Fox, said the current legislation had “a lot of strengths” but he was fighting for a “fair funding arrangement” rather than to keep the status quo.

“We’re not out for an advantage but fair funding,” he said. “We’d be very concerned if the government were going to cut funding to public schools, same as we are concerned they are cutting our funding.”

Asked if this “nuclear option” risked massive backlash from state governments and the education sector, Birmingham said he was “not suggesting that will be what we do”.

He said the government preferred to invest in Australian schools, and the Gonski 2.0 plan would give half of all schools growth of 5% a year in per student funding or more.

Birmingham said he was “very hopeful” the Senate would pass the plan, and the Greens and crossbench had kept an “open mind” – unlike Labor – despite signs the Greens are positioning to oppose it.

Birmingham said the Greens “may have an argument” about whether enough money was going to schools but he hoped “they won’t throw the baby out with the bathwater” by blocking the package.

Asked if he would make compromises – including possible extra funding for state schools – Birmingham said the government had “demonstrated we’re pragmatic when it comes to getting legislation through the Senate and this policy won’t be any different”.

He said he would work constructively with the crossbench but would not negotiate in public forums or “trade away our principles”.

On Thursday the Australian Education Union brought principals to Canberra to lobby the crossbench to oppose the schools package, and the Catholic system is writing to parents warning of possible fee rises.



Responding to the Catholic sector’s campaign, Birmingham said the federal government respected its autonomy and would continue to pay it a lump sum that it could distribute according to its own model.



He said Gonski 2.0 granted Catholic systemic schools 3.5% growth per student a year on average so there was “no reason they can’t give each [school] the same funding plus 3.5%, and continue to do that year on year if they want to stick to their current methodology”.