Prime Minister Kevin Rudd has sparked a row with the Coalition over asylum seekers by suggesting the Opposition's policy to turn back boats could risk "conflict with Indonesia".

Mr Rudd, who was grilled by journalists for the first time since he ousted Julia Gillard from the Labor leadership on Wednesday, touched on a wide range of major policy issues.

But when questioned about Labor's policy on asylum seekers, Mr Rudd quickly shifted the focus to the Coalition's plan to "stop the boats".

"If Mr Abbott were to become prime minister and continue that rhetoric and that posture and actually tries to translate that into reality, I really wonder whether he's trying to risk some sort of conflict with Indonesia," he said.

Key points: Kevin Rudd says Opposition's asylum seeker policy could risk conflict with Indonesia

Kevin Rudd says Opposition's asylum seeker policy could risk conflict with Indonesia Opposition's Julie Bishop says comments shocking and reckless

Opposition's Julie Bishop says comments shocking and reckless Rudd promises to consult with Labor caucus on key policies

Rudd promises to consult with Labor caucus on key policies Deadline to sign up to school funding plan is to be extended by two weeks

Deadline to sign up to school funding plan is to be extended by two weeks Rudd urges Coalition to allow conscience vote on gay marriage

A diplomatic dispute with Indonesia in the 1960s led to what is now known as the "Confrontation", with 23 Australians killed.

Mr Rudd has suggested history could be repeated if Mr Abbott becomes prime minister and tries to implement his plan.

"Let me tell you, that if you are a student of the Australia-Indonesia relationship, which I have been, since the days of the late forties until now, there have been some pretty rough times in the relationship.

"I never want to see that happen again.

"I for one as Prime Minister of Australia will do everything within my power to continue to improve the relationship with Indonesia rather than to put it at risk.

"I'm not suggesting Mr Abbott would intentionally head in that direction at all, but I'm saying very clearly you have a policy collision here between what he says and what the government of Indonesia says."

Mr Rudd has confirmed that he will visit Indonesia for the annual leaders' meeting with Susilo Bambang Yudhoyono on July 4-5.

Shortly after his remarks, Opposition foreign affairs spokeswoman Julie Bishop described Mr Rudd's comments as irresponsible and reckless.

"It is a massive overreach, it is a shocking diplomatic gaffe, and he should retract it," she told Sky News.

"It is not our policy to seek to trigger a conflict with Indonesia."

Even the former head of the defence force, Chief Admiral Chris Barrie, says Mr Rudd's comments are far-fetched.

"On one hand I think a declared policy of tow-back doesn't make any sense at all and I think it's encouraging people smugglers to put the lives of asylum seekers at risk, and on the other hand I think it's going too far to suggest that we might actually engage in a shooting war over it," he said.

"It's very hard to see how we would fight over this. You can make this a very difficult situation if you want to, but the idea we would actually start to fight over this, I think you know, I think is just going too far."

Earlier today, Opposition Leader Tony Abbott zeroed in on Labor's border protection policies, describing Mr Rudd as the people smugglers' "best friend".

Meanwhile Foreign Minister Bob Carr, who is in Jakarta for meetings with his Indonesian counterpart, says he thinks most people arriving in Australia by boat are not refugees but economic migrants.

Sorry, this video has expired Bishop slams Rudd's 'wild claims'

He says he wants to remove the independent Refugee Review Tribunal's discretion in determining cases by having his department provide dossiers on the conditions in other countries.

The tribunal would then have to use that information to decide whether people were eligible to claim asylum.

Rudd promises to consult with Labor caucus

Mr Rudd also used his first full media conference to assure the Labor caucus and the public he is a changed prime minister.

He flagged his intention to make changes to key Labor policy areas, but says the decisions will be consultative.

"Those of you good ladies and gentlemen of the press who expect an avalanche of policy decisions between now and next Monday, just chill for a while," he said.

Mr Rudd was previously criticised by a string of prominent frontbenchers for failing to consult on decisions, but he has stressed that his approach has changed.

"One of the things I have learnt is the absolute importance of proper orderly consultation with cabinet colleagues on any major decision of the Government," he said.

Mr Rudd, who is set to announce his new frontbench on Monday, says his inner circle will continue with key briefings this afternoon, including a rundown on national security.

School funding deadline extended

Mr Rudd has also extended the deadline for the states and territories to sign up for the school funding plan by two weeks.

Legislation underpinning the Gonski plan, which was a key pillar of the Gillard government's re-election platform, passed in federal Parliament just hours before Ms Gillard was ousted as prime minister.

Under the original deadline imposed by Ms Gillard, all jurisdictions had to sign up to the plan by this weekend.

So far only South Australia, the ACT and New South Wales have agreed to the plan.

Mr Rudd says he looks forward to beginning his own negotiations.

"I'm sure I'll get a warm reception because all we Queenslanders bond closely particularly after a State of Origin win," he joked.

Mr Rudd said he has spoken personally with the author of the national school funding proposal, David Gonski, about how the plan has been sold to voters.

He said the funding changes will no longer be known as the 'Gonski' plan.

"The bottom line is I don't think David wants his reforms referred to as the Gonski reform," Mr Rudd said.

"I think when I last spoke to him he finds that a bit too confusing."

The plan will inject $14.5 billion into primary and high school education over the next six years, with part of the funding to come from the $2.5 billion taken out of the university sector over the next four years.

Rudd wants conscience vote on gay marriage

Mr Abbott was challenged to commit to a conscience vote on gay marriage, or allow voters to decide.

When he was prime minister last time, Mr Rudd opposed gay marriage but earlier this year he revealed he had changed his mind.

Labor MPs have been afforded a conscience vote if the legislation is put before the parliament, but the Coalition's agreed party position is to oppose it.

"Whoever wins the next election, please, let's just have the civility to open this to a conscience vote for all," Mr Rudd told reporters.

Mr Rudd says if Mr Abbott will not commit to a conscience vote, other options must be explored.

"I would like to see this done, and the reason I want to see it done is frankly it causes so many people such unnecessary angst out in Australia, in the gay and lesbian community. It just should not be the case," he said.