The Morrison government has dramatically escalated a brewing fight with the states over school funding, threatening to withhold billions of dollars unless ministers sign up to its new education funding deal.

The education minister, Dan Tehan, last night sent an extraordinary letter to state ministers warning they would be responsible for delivering billions in extra money to schools if they refused to sign up to a long-term funding agreement.

“Should a bilateral agreement not be in place by this date, the commonwealth will be unable to make the first 2019 payment to the relevant state or territory, including with respect to non-government schools,” Tehan wrote in a letter to Victorian education minister James Merlino.

“In these circumstances, I would seek your assurance that the Victorian government would make up any shortfall experienced by the non-government sector to ensure that schools do not face undue financial stress.”

The letter is a significant escalation of the funding stoush which has begun between the states and the commonwealth since the announcement of a $4.6bn funding deal with the Catholic and independent school sectors.

The $23.5bn Gonski 2.0 deal between the commonwealth and the states last year only resulted in an interim school funding agreement for 2018.

After the Liberal party leadership change in Canberra there had been speculation that the jurisdictions would roll the deals over again, but Tehan’s letter suggests he wants individual long-term deals in place by the end of the year.

If a long-term deal was agreed to it would have to be struck by December 7 before the first 2019 federal funding payments are due to be distributed on January 8.

Merlino called it an “unprecedented and clumsy threat”.



“Only weeks ago, before the Liberal party’s internal chaos erupted, there was a different minister sitting in Mr Tehan’s chair, so it is hardly surprising he hasn’t got his head around the issues yet and doesn’t understand where negotiations are up to,” Merlino said.

“Now he is rashly demanding the states and territories immediately sign a deal, essentially holding a gun to the head of states and territories by inventing deadlines.

“If Mr Tehan were serious about education he would work with states and territories to provide fair funding for every child rather than come up with solutions that pit one sector against the other.”

With only a few months to reach a new agreement, the Queensland education minister, Grace Grace, said it was “about time” the government commenced discussions.

“We’ve been waiting months for the federal government to show some interest in reaching a long-term funding agreement,” she said. “But we won’t be forced to sign up to any agreement that isn’t equitable.”

The shadow education minister, Tanya Plibersek, accused the government of “holding Australian schoolchildren to ransom”.

“Parents and teachers are right to be furious,” she said. “State governments hate Mr Morrison’s massive public school rip-off, so he’s resorting to desperate [tactics]. He could solve this fight tomorrow by fairly funding public schools.”

Relations between the states and the commonwealth have deteriorated quickly since the private school deal was announced last week.

Most states have called for the government to increase overall funding to public schools in the wake of the deal and the New South Wales and Queensland governments have gone as far as threatening not to sign up to an education funding deal at all.

On Thursday the NSW minister, Rob Stokes, who has a meeting with Tehan scheduled for Friday, said he would argue “very forcefully” for extra state school funding and that he would push for an extra $7bn to be spread across the country over the next 10 years.

It comes after Guardian Australia revealed on Wednesday that some states were using the deal with the private school sectors to argue for a recalculation of their share of overall funding to include things like early childhood education and capital works.

It would see the states spend less overall on public schools.

After initially appearing to be open to negotiation on that aspect, Tehan’s letter to Merlino appeared to rule that out.

“The commonwealth does not support counting expenditure that risks significantly inflating contributions without a genuine increase in recurrent investment,” he wrote.

“I recognise that this does not reflect the full investment required to deliver quality schooling, and it was never intended to do so.”