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Quality education: the case for an education revolution in our schools: address to the National Press Club, Canberra [and] Questions and answers.



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Prime Minister of Australia

Speech

Quality Education: The Case for an Education Revolution in Our Schools, Address to the National Press Club, Canberra

27 August 2008

E&OE

The Government has now been in office for a little less than nine months - or just under a quarter of the current Parliamentary term.

In our first nine months our priority has been three-fold:

z to lay the foundations of a program of responsible economic management in the face of increasing global economic uncertainty; z to implement, principally through the Budget process, the commitments we made last year to the Australian people on tax, on income support and childcare to help those under financial pressure; and z third, to begin to lay out a policy and financial framework for addressing Australia’s long-term challenges in

education, in hospitals, infrastructure, climate change and water following 12 years of neglect.

As we begin a new parliamentary sitting, I would like to outline our overall approach to the Government’s policy framework for the future.

I would also like to outline more specifically an important part of the Government’s commitment to implement an Education Revolution: namely, a policy agenda to significantly improve the quality of Australia’s schools.

Around the world today, governments are dealing with the most challenging global economic conditions since the early 1990s.

The US sub-prime crisis has changed the economic outlook for the global economy and consequently for Australia as well.

As the US Federal Reserve Governor Ben Bernanke said on the weekend, the global financial storm “has not yet subsided”.

Canada, France, Germany, Italy and Japan have already registered negative quarters of economic growth.

Australia, as a result, has confronted a particularly complex set of economic challenges this year.

Contractionary pressures abroad.

Compounded by inflationary pressures, low productivity growth and supply constraints in the domestic economy - in large part the legacy of a decade of policy neglect.

This has presented real challenges for economic policy from the earliest days that we have been in office.

The Government has nonetheless moved quickly to respond to these challenges.

We have delivered responsible economic management, with a conservative Budget grounded in a $22 billion of surplus.

That surplus was designed to put maximum downward pressure on inflation - made necessary because the Government inherited inflation at 16 year highs, 10 consecutive interest rate rises and the second highest interest rates in the developed world.

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This surplus was achieved by arresting expenditure growth, which had been growing in real terms at four per cent in the previous four years, and by reducing tax to its lowest level as a share of GDP in nearly a decade.

The surplus was also designed to provide a buffer for the future - the policy flexibility to negotiate any uncertain economic times which might lie ahead - which is why the Liberals’ current assault on the surplus in the Senate is so grossly irresponsible.

Furthermore, despite widespread calls to drop our commitment to tax relief, we delivered a $55 billion Working Families Support Package - together with a $7.5 billion package for seniors, carers and disability pensioners - all designed to help Australians under financial pressure.

Finally, the Government through its regulatory agencies has been actively engaged with global financial institutions in responding to the global financial crisis, while maintaining the domestic liquidity needs of Australian financial markets through concrete measures in the public bond market.

While prosecuting a policy of responsible economic management, the Government has also been determined to honour its pre-election commitments to the Australian people.

When we formed government, I said I had no intention of recycling the absolute cynicism of previous governments -making a swag of pre-election commitments then reneging on them as “non-core” promises.

That’s why we have delivered:

z Tax cuts for low and middle income earners. z The Education Tax Refund. z Raising the child care tax rebate from 30 to 50 per cent. z A permanent increase in the utilities allowance for pensioners, carers and those on the Disability Support Pension. z Re-instatement of the Commonwealth Dental Scheme. z First Home Saver Accounts. z Rolling out computers in schools and trades training centres across Australia’s 2,685 secondary schools. z Abolishing AWAs for the future and building a modern, fair and flexible workplace relations system. z Taking decisive action on climate change both at home through the Carbon Pollution Reduction Scheme and

through our negotiations abroad following our ratification of Kyoto; and z Bringing the blame game to an end by reinvesting in the nation’s public hospital system.

We are honouring our commitments made to the Australian people.

But for us that’s not the end game. In fact it marks just the beginning.

The beginning of a period of long-term reform to tackle the nation’s long term challenges.

Because for this government that is the central purpose of being in government - to make a fundamental difference to the future direction of the nation.

We are determined not to repeat the neglect and wasted opportunities of the Liberals in government.

For years we watched in frustration as the best economic opportunities in a generation passed us by.

Rather than investing the proceeds of the mining boom, the Liberals squandered them on consumption.

It was a decade of opportunities squandered, not of opportunities seized.

Our Government belongs to the reforming centre of Australian politics - a tradition that recognises the limitations of both markets and of governments.

We believe policy reform is necessary if Australia is to seize the future.

Our long term reform agenda embraces the full canvas of government, including how we build:

z a more secure Australia given the new national security challenges we face; z a stronger Australia given the long term challenges to our economy; z a fairer Australia given the extreme levels of disadvantage that continues to exist among us; and z an Australia capable of meeting the sweeping new challenges of the 21st century, including climate change.

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The first priority of government is the nation’s security.

This challenge is becoming increasingly complex as the balance of global strategic and economic power shifts to the Asia-Pacific region, as terrorism continues as a global and regional threat, and new challenges emerge such as energy security.

That is why we are developing a plan to strengthen our defence forces, to enhance our relations with friends and allies and to tackle non-traditional threats like terrorism, natural disasters, water scarcity, food scarcity and energy security.

The starting point will be a new national security policy, to be outlined in a National Security Statement - the first in Australia - during this session of the Parliament.

We are also bringing new rigour to our defence planning through a new Defence White Paper that will detail the emerging strategic terrain we face and how our policy and defence procurements will respond.

And, to give our Armed Forces the resources they need, the Government has committed to providing 3 per cent real growth in defence spending for the full decade ahead.

The Government will strengthen the US alliance as well as our security cooperation with regional partners like Japan, the Republic of Korea, Indonesia, Malaysia and Singapore.

And, to help shape the future of our region, we have begun a regional dialogue about an Asia-Pacific Community to build a culture within our region of security cooperation.

We believe we must try to shape the future of our region rather than let it simply be shaped by events - and that means unapologetically prosecuting an activist defence, foreign and security policy for the future.

The Government is committed to using the proceeds of the mining boom to invest in Australia’s long term economic future.

The key to building a strong economy is long-term productivity growth.

Over the last 40 years, productivity growth has accounted for more than 80 per cent of the improvement in Australia’s living standards.

But in recent years productivity growth has declined sharply - from average annual growth of 3.3 per cent during the productivity cycle of the mid-1990s, to just 1.1 per cent in the current cycle.

The Government is committed to building our long-term prosperity by investing in five key platforms for productivity growth:

z an education revolution by improving the qualitative and quantitative investment in the skills of the workforce - driven in part by our $11 billion Education Investment Fund; z second, a nation-building infrastructure plan; z third, investing in innovation and the industries of the future; z fourth, creating a seamless national economy through business deregulation; and z finally, taxation reform.

I will return to education presently as this will go to the core of my remarks today.

On infrastructure, we have begun our reform program by establishing a $20 billion Building Australia Fund to support critical national infrastructure such as road, rail, ports and high speed broadband.

We have reinvigorated the Council of Australian Governments with a major reform agenda, including a list of 27 areas of regulatory reform for building a seamless national economy.

And we have established the Henry Commission as the starting point for long-term reform of tax, welfare and retirement incomes.

Creating a fairer Australia is a crucial part of the Government’s reform agenda.

Disadvantage holds the economy back by reducing workforce participation.

It also holds the economy back by increasing demand on public resources.

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Disadvantage forces too many Australians to live on the fringes of the nation’s economic and social life, struggling for training, work, health care, dental care and access to housing.

In many cases that disadvantage is compounded by a combination of family breakdown and the weakening of community ties.

Our challenge is to bring these Australians back into the mainstream through a reform agenda of social inclusion.

The Government will be pursuing new ways of doing this.

Through tax relief towards the bottom end of the income scale.

Through a review of retirement incomes with a view to placing pensioners on a more secure footing for the future.

Through action on homelessness.

Through a package of housing affordability measures, including First Home Saver Accounts, the National Rental Affordability Scheme and the Housing Affordability Fund.

Through working to close the gap with Indigenous Australian’s.

And through getting rid of Work Choices and building a fair and flexible industrial relations system for the future.

Australia must now prepare also for the sweeping set of challenges that we face for the future - rather than simply burying our heads in the sand.

That’s why the Government is prosecuting a Carbon Pollution Reduction Scheme, a national energy efficiency and renewable energy strategy.

That’s why the Government, for the first time in the history of the Commonwealth, has begun the large scale buy-back of water entitlements to reduce the obscene levels of over-allocation in the Murray Darling River System.

That’s why the Government is developing a long term agenda to reform the health and hospital system including increased investment in public hospitals, a national preventative health strategy, the reduction of elective surgery waiting lists and the introduction of GP super clinics - all necessary responses to a great challenge for how to deal with the rapidly ageing population of the Australia into the future.

The Commonwealth can’t tackle all these challenges on its own.

It’s also going to take a new way of governing - particularly increased cooperation between federal, state and local governments, businesses and community organisations.

We want to take Australians with us by engaging with the community, by harnessing the best ideas and by drawing on the best talents of our people.

That’s why we convened the 2020 Summit - to get the best ideas on Australia’s future.

That’s why we have also made Community Cabinet meetings part of our regular program of government.

That’s also why we will be drawing in the private and community sectors, to partner with the Government in new ways of achieving our reforms.

We will start this through our reforms to Indigenous education and employment programs.

It is based on our view that government is not the repository of all wisdom, that there are limits to what governments can effectively do and that the private and community sectors have much, often very much to offer.

The five policy areas that I have discussed constitute the framework for the long term reform agenda for the nation and for the government.

I said before that within this framework, the core of our economic reform agenda is to build long-term productivity growth - in large part by an education revolution in the quantity and quality of our national investments in the education of the next generation of Australians.

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Today I want to outline the next chapter in Australia’s education revolution - the reform of school education.

In my first major policy speech as leader of the Federal Parliamentary Labor Party last year, I argued why Australia needs an education revolution.

I said the evidence about the link between long term prosperity, productivity growth and investment in human capital could not be clearer.

As the OECD said in 2006:

“evidence of the public and private benefits of education is growing. Application of knowledge and skills are at the heart of economic growth, with the OECD attributing half of GDP per capita growth from 1994 to 2004 to rising labour productivity.”

That is why we are committed to delivering an education revolution.

In our first Budget we allocated $19.3 billion to education initiatives over the next four years to help deliver our commitments on:

z a national curriculum in English, maths, the sciences and history; z a $1.2 billion Digital Education Revolution; z a $2.5 billion Trades Training Centre program; and z guaranteed funding to both government and non-government schools.

The Liberal Government talked about teacher training, performance standards, literacy and numeracy. But after 12 years, 24 reports and 220 recommendations, there was nothing much to show of it.

No national teaching standards.

No national curriculum.

Too many kids still leaving school too early.

Too many who are unable to read or write.

And now we are playing a game of catch up football. There is clearly much to be done.

While Australian schools stand up reasonably well in international comparisons, our competitors are quickly catching up.

A 2006 OECD study shows Australia’s average performance in reading literacy worsened between 2003 and 2006, primarily because of a decline in the percentage of high-performing students.

It shows that in scientific literacy, 40 percent of Australia’s Indigenous students, 27 percent of students in remote schools and 23 percent of students from the lowest socioeconomic quartile performed below the OECD baseline.

Australia also has relatively low levels of Year 12 completion by OECD standards.

After doubling in the 1980s and early 1990s, our retention rates have flat-lined at around 75 per cent since 1992. 30 per cent fewer Indigenous young people reach a Year 12 qualification than non-Indigenous.

Why does this matter? Because students with low literacy and numeracy in Year 9 are more likely to get frustrated and leave school early - and more likely to end up unemployed or only marginally attached to the workforce.

Conversely, the evidence shows that each additional year of schooling increases individual earnings by around 10 per cent.

Another recent study found that increasing a country’s literacy scores by 1 per cent against the international average is associated with an increase in living standards of 1.5 per cent of GDP per capita.

That is why, through COAG, we are developing reforms aimed at achieving the ambitious national goals of lifting Year 12 or equivalent attainment to 90 per cent by 2020.

When COAG meets in October and December this year, we will be working towards historic reforms to Commonwealth-State relations.

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In the area of schools it’s time to move beyond outdated divisions between Commonwealth and State responsibilities and between public and private provision.

Our focus must be on the basics: ensuring that all of our children emerge from school able to read and write, with basic maths and science skills and the ability to enter the workforce, vocational training or university study.

So what is to be done?

Greater accountability to parents and the public is one important area of reform.

Greater transparency for the outcomes achieved by Australian schools is another area of reform.

All Australian schools - public and private - need to do more to demonstrate the outcomes they achieve with the resources they receive from the broader community.

This is not about creating an arbitrary public league table.

It is about ensuring that all schools, all teachers and all students are focused on achieving the results we need as a nation and realising the potential also of each child.

That is why I am today announcing three central pillars of reform in schools that the Commonwealth aims to achieve through Council of Australian Governments later this year:

z one, improving the quality of teaching; z two, making school reporting properly transparent; and z three, lifting achievement in disadvantaged school communities.

The States and Territories are important partners in this process.

Our challenge to them is to commit to concrete, tangible reforms.

And our commitment to them is to match ambitious policy reform on the one hand, with new financial support on the other as part of our upcoming National Policy Partnership negotiations on the future of education.

Research shows that nothing at school influences student outcomes more than excellent teaching.

It has measurable impacts on cognitive, affective and behavioural development.

Studies suggest that the quality of teaching accounts for something between 30 and 60 per cent of the outcome across these areas.

A McKinsey report on the world’s best performing school systems last year highlighted the importance of recruiting the top university students into teacher training. In Korea, those recruited into teaching are in the top 5 per cent of students; in Finland, they are recruited from the top 10 per cent and in Singapore and Hong Kong, the top 30 per cent.

I believe our teachers are our greatest economic asset.

We need to re-establish in Australia that teaching is a great profession and a great calling for the best and brightest of our university graduates.

We must insist on teaching excellence in every school.

And insist that school leadership is strengthened, particularly in schools where the learning needs of students are most acute.

Of the school-based influences on outcomes, school leadership is second only to teaching in its importance.

That is why the Government will work through COAG to start a new era in Australian school education, starting with a National Policy Partnership on Quality Teaching.

To establish new national standards to reward both principals and the best performing teachers.

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To provide additional funding to encourage school systems to invest in teacher recruitment, development and excellence.

The package will also include measures to recruit the nation’s most talented graduates into teaching and place them where they can make the greatest difference.

In recent years the US and the UK have implemented innovative and successful programs of this kind - the Teach for America and the Teach First programs - where highly talented graduates are given an accelerated pathway into teaching, placed into the most challenging school environments and paid at a higher rate.

They also receive mentoring and support from leading businesses and an option of employment after they complete their initial teaching assignment should they choose to leave.

These programs have given talented young graduates a taste for teaching - and many have made it their life profession as a result.

Under our new reform partnership, beginning from next year, we will work towards establishing a similar scheme in Australia.

Participation will be open to non-government as well as government schools - because we know there are disadvantaged schools across the entire education spectrum.

Currently, most teachers reach a salary ceiling at around $75,000. If they aspire to earn more, they must leave the classroom.

We need to send a clear message to university students that teaching is a rewarding long term career.

And send a message to experienced teachers within the school system that they should keep striving for excellence.

I want our best and brightest teachers motivated and rewarded to work in our most challenging schools.

I want school principals to have the autonomy to make more staffing and salary decisions at the local level, to tackle local problems like poor literacy and numeracy.

And I want teachers spending their time doing what they do best - and that’s teaching - not losing their valuable hours in paperwork or on tasks better handled by support staff.

Last year I said that Australian school students deserve a higher level of transparency concerning the overall performance of their schools.

The Government is committed to investing substantially in our schools to deliver better outcomes.

But we will not be making those investments without demanding greater accountability in return.

As I said in January 2007, we are committed to a greater quantitative effort in the funding of the school system, but beyond that qualitative performance is equally important.

I appreciate there can be debate about the most reliable indicators of school effectiveness.

But I cannot understand why public institutions such as schools should not be accountable to the community that funds their salaries and their running costs.

Right now, we do not have accurate, comprehensive information to allow rigorous analysis of what schools and students are achieving.

This must change.

Parents have a right to information to inform their family’s decision making about school enrolment.

It is important, too, that this information gives parents the full picture.

Simplistic league tables don’t really tell us how well a school is performing.

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They don’t tell us about the student population that the school started with - and its level of educational advantage.

Everyone understands why a private school on Sydney’s north shore might do better than a comprehensive government high school in the outer suburbs.

But it is not unreasonable to expect that schools with a similar mix of students and similar starting points should do equally well.

What parents most want to know is what difference a school is going to make - in other words, the extent to which it is adding value to the results of their students.

Parents overseas can get this information. Australian parents - and students - deserve the same.

That is why today I announce that we will be making agreement on individual school performance reporting a condition of the new national education agreement to come into effect from 1 January 2009.

Within a year, we want to see increased information available to Australian parents.

And within three years, a report that shows not just how their child is doing, but how their child’s school is performing compared to similar schools.

Knowing where there is underperformance will help us to target additional resources.

I know some will resist these changes.

There is little doubt that greater transparency will reveal some schools in Australia may be seriously underperforming and may have been struggling for some time.

Many, but not all, of these schools serve disadvantaged communities.

Many, but by no means all, of these schools are in the government school system.

We should not tolerate underperformance. It damages the students irreversibly. It fails their families. And therefore it must change.

Where it is clear that individual schools are not up to the mark, we need to be prepared to invest money and effort to lift their performance.

And where despite best efforts, these schools are not lifting their performance, the Commonwealth expects education authorities to take serious action - such as replacing the school principal, replacing senior staff, reorganising the school or even merging that school with other more effective schools.

Tough action is necessary if we are to achieve real change. And it’s tough action that our reform payments will reward.

A third focus of our school reforms is to tackle underachievement in our most disadvantaged school communities.

In Australia, socioeconomic status is more strongly associated with educational achievement than it should be.

I have already referred to the OECD research which found that students in the lowest socioeconomic quartile lagged those in the highest socioeconomic quartile by 2½ years.

If Australia is to be the land genuinely of the fair go, we must do a better job in ensuring that every young Australian gets a decent education.

That is why today I announce that we will pursue a further National Policy Partnership with the States and Territories to tackle underachievement in our schools.

There is no ‘one size fits all’ answer to school underperformance - but we can give schools more control over their performance and more support in achieving better outcomes.

We can provide more funding and greater discretion to principals and local school communities to address their specific local conditions.

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That is why, beginning next year, this National Policy Partnership will contain measures to help:

z attract high performing principals and teachers to underperforming schools; z provide funding for intensive learning activities and additional coaching for those students who are falling behind; z create robust networks of parents, other schools, local communities and businesses to help students in transitioning successfully to work or further education; and

z to provide incentives for individual schools to extend their reach through longer opening hours, after-school study support, sports and other activities to help keep students engaged in their studies.

To make a real difference, we anticipate that governments will need to commit to additional investments of around $500,000 per year for an average sized school.

This funding should target areas where intensive learning support can make the greatest difference to student outcomes - like early intervention and support for children with developmental challenges.

I want to see these resources beginning to be deployed in our most disadvantaged schools within the next 12 months.

The measures that I have outlined today will involve a lot of public debate in the period ahead.

But I intend to take these measures to COAG for agreement by year’s end.

In the meantime, the Deputy Prime Minister and I will be spending a lot of time talking to parents, a lot of time talking to teachers, a lot of time talking to students, business partners and unions around the country. This is serious business we are talking about here today.

The measures I have announced today are the next step in delivering on our education revolution.

They are designed to reform our school system for the better.

They are designed to bring about better teaching, better school leadership and better results for schools in disadvantaged areas.

All these changes are likely to cost money and that is where we will have a significant, significant negotiation with the States.

I know it’s sometimes difficult to accept change when you’re battling against the odds trying to help on the ground society’s underachievers.

But I want people to understand that our reforms are essential to Australia’s future - because quality education is good for our economy, good for our community and good for individuals. It will help create jobs and higher wages, and will create better opportunities for all Australians.

The Government wants the next generation of Australians to be the best educated, best skilled, best trained in the world.

We don’t apologise for this ambition.

Today, we take one further practical step towards achieving the education revolution that Australia needs.

One step further to building a stronger, fairer and more secure Australia, and one capable of handling the great challenges of the 21st century that now lie before us.

I thank you.

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Prime Minister of Australia

Interview

Questions and Answers, National Press Club, Canberra

27 August 2008

Subject(s): Education; Condensate Tax; Cost of living; Fuel Watch; Employment figures; CPRS Green Paper

E&OE

JOURNALIST: Prime Minister, Chris Uhlmann from the ABC. Can you tell us the difference between an arbitrary league table and an individual school performance report? And, no matter what you call it, if parents find out that their school is not performing well; won't they do the rational thing: vote with their feet and leave?

PM: Well, on the last point, we would make no apology for that. The whole idea is to make sure that schools are accountable for their performance. And part of accountability means that the parents and the students know how that school is performing against agreed standards.

On your first part of your question which goes to the question of a national league table it's this: when we talk about an arbitrary national league it's basically one which would try and line up a comprehensive government school in the outer suburbs of, you know, Brisbane, Sydney or Melbourne with the likes of Geelong Grammar and the rest.

Far better it is that instead you have a system whereby schools which broadly have common characteristics, common socio-economic profile across the country within government and non-government systems for that data to be readily comparable. That's what we're talking about.

And the second thing as well, put yourself in the position of parents, and a highly labour-mobile country which Australia is today. When people move interstate, one of the things they want best and quickest is readily available comparative information on the schools within that geographical area. And so the other element of comparison that we would look to through the agreements that we seek to make with the states is to make that available as well.

So if you move to a new town, whether it's Canberra, or whether it's the southern suburbs of Brissie where I come from, you can quickly access comparative data. That's what we're talking about, and we think that's a practical way forward.

The argy-bargy on this is going to be significant with the states. We accept that but we intend to prosecute this and we have some way to go yet in the months ahead. But that's where the Commonwealth wants to land.

JOURNALIST: Prime Minister, Andrew Probyn from The West Australian. Let me take you off the topic of education for a tick. What justification…

PM: That's very amicable of you Andrew.

JOURNALIST: What justification would Woodside and other North West Shelf partners have in passing on the $2.5 billion in condensate tax to WA consumers.

And, secondly, Martin Ferguson says that if they did it there might be - it could precipitate action from the competition watchdog. How so?

PM: Well, I think on the first point which is the impact on Dom. Gas in WA, I'd draw people's attention, I think, to a statement made on 20th August by Dr Nelson on behalf of the Liberal Party, saying that based on his advice there would be no inflationary effect. So I'd simply leave that stand in its own terms, in terms of the Liberal Party's position.

As you know, within the debate on condensate, Woodside are not happy; let's just be blunt about it. No-one likes getting a tax when they haven't had one before. That's just the reality.

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But we don't intend to shirk from this. Remember the reason why that particular arrangement for condensate was put in the first place was to encourage the development of the industry some decades ago. Now, some decades have now past and I think it's time the broader Australian taxpayer got a return on all of that because that money to be obtained through that tax, which is a unique concession, is to be dedicated to the sorts of reforms for schools that I've just been describing in these remarks.

And on the question of the competition policy watchdog, I'm sure that the ACCC and others will be watching keenly the actions of individual companies in responses to any individual tax measures which have been announced.

JOURNALIST: Mr Rudd, you ran through a list of the promises that your Government's delivered on since winning government, can you explain in practical terms how day-to-day people are better now than they were nine months ago?

PM: Well, let me go to one which is immediate, which is the fact that you have of that $55 billion working family support package through the Budget, tax cuts flowing through to low and middle income earners right across the country and they began to flow from 1 July.

And on top of that the particular changes, some $7.5 billion worth of changes, for pensioners, for carers and those on the disability support pension. And furthermore, as of 1 July, the fact that the childcare tax rebate has gone up from 30 per cent to 50 per cent.

So, in terms of bread and butter concerns, these are very bread and butter responses delivered within our first six months in office. And the reason we've done that is that we haven't accepted the argument by someone else last year that working families have never been better off. We've actually taken a different view, and that is that working families, pensioners and carers are facing real cost of living challenges.

And that's why we, through the first Budget, have sought to do three things. One, adhere to the discipline of responsible economic management, given the uncertainties in the global economy, hence the surplus. Two, deliver on our pre-election commitments to assist working families, pensioners and carers under financial pressure. And three, to lay out the policy and financial architecture for our long-term reform agenda through the three great reforming investment funds that we've established: $20 billion for the Building Australia Fund for infrastructure; $11 billion for the Education Investment Fund to invest in both vocational education and training, and in higher education; and, thirdly, the $10 billion Health and Hospitals Fund.

We think these are practical responses now to the challenges that communities are facing and families are facing, as well as opening up our pathways to the future through investments in the country's long-term needs.

JOURNALIST: Prime Minister, Malcolm Farr from The Daily Telegraph. You used the euphemism significant negotiation to describe the talks with the states but…

PM: And argy-bargy.

JOURNALIST: Yes…

PM: Which is also a technical term.

JOURNALIST: Well, on the argy-bargy index isn't your toughest opponent going to be the teaching unions? And would you say that the teaching unions have so far had a positive role in giving parents more transparency as to the operation of schools?

PM: I think some of the - it's a very mixed bag, to be honest. Some of the unions have been complete to the - resistant, I think it's fair to say, and we therefore expect a fair bit of argy-bargy on that front as well, but we don't intend to shirk from it. We think this is the right way to go.

I think, at the end of the day, what's going to prevail in this debate is the interests of parents and of students, and that is they deserve to have the information available to them of how schools are performing.

We recognise fully all the challenges which local school communities and teachers face if you're dealing with really entrenched social and economic disadvantage. But at the end of the day parents and students should be able to have the information in front of them.

Also, as I sought to answer the question from Chris Uhlmann before, if some walk with their feet that's exactly what the system is designed to do; that is to make sure that school communities are being responsive to the legitimate high expectations of parents and kids that they get first-class education opportunities at the school level.

Because you know something? Having been on a P and C myself, once you - once kids start going through the primary school and they start lagging behind literacy and numeracy measures, and you don't tackle them at least by the early high

school you really start getting to the point where it's too late. So, frankly, having this information up there and putting the pressure back onto school systems, which are run at the end of the day by state governments and by others, to ensure that these schools are performing at their best levels, is what this set of reforms is all about.

JOURNALIST: Mark Riley from the Seven Network, Mr Rudd. You said in your speech that all these changes are likely to cost money, which appears to be an observation of breathtaking understatement. When you're talking about increasing…

PM: I didn't say they'd be for free.

PM: You're talking about increasing teachers' salaries and additional funding of half a million dollars to the average school per year. How…

PM: Half a million.

JOURNALIST: Sorry?

PM: Half a million.

JOURNALIST: Half a million, yeah. Half a million.

PM: I thought you said a B word there for a minute.

JOURNALIST: Half a million. That's an awful lot of money. How much money is it and how much is the Commonwealth prepared to provide?

PM: Well, I noticed today the - talking about unions before, the Australian Education Union is out there giving us a whack about our provision for funding for school education over the forward estimates.

And of course it's an inherently dishonest document, and the reason it's dishonest is this. The union known full well that we are currently in direct negotiation with the states and territories for the funding which flows from 1 January next year. In other words, what we've put in since we've come into government is for this year alone. And everyone knows that. And we're in the middle of a negotiation.

Part of my - purpose of my remarks today is saying, this is where the Commonwealth Government wants to land in terms of quality education, that is that's where we want to have the outcome being on performance reporting for schools, on additional payments for the best performing teachers within the schools, appropriate supports for the best principals in schools, and of course the other part of the package being how do we support those schools who are suffering from most entrenched disadvantage.

So, yes, it does all cost money. But the purpose of a negotiation is that we don't hand over a blank cheque. I presume that's the intention of the AEU in putting out that document that it's done today. It's just nonsense.

We're up for negotiation which will be conditional on these quality education benchmarks being met. That's what we're on about. And so that's why we haven't put forward concrete figures in the speech I've given today.

This is the hard part of the negotiation which Julia and Wayne, the Treasurer, will be into big time, literally in the months ahead. But we need to get to a conclusion because the next school year starts in January, and we intend to drive a hard bargain.

JOURNALIST: David Crowe from the Australian Financial Review. Prime Minister, in an hour or so hostilities will resume in Question Time. The debate will turn again to the Coalition's position on various bills out of the Budget.

Just looking at one, for instance, FuelWatch seems doomed given the way the Coalition and some of the independents might vote. Is that change and other Budget measures you've got worth going to an early election for? Are they that important to the ordinary voter that you would go early given the experience of John Howard in '98 and Bob Hawke in '84?

PM: When have I said before I'm going to an early election? There seems to be an assumption in your question that I am, or have said something to that effect. So let's take away the presupposition underpinning your question because I've never said that, unless some of you can correct me to the contrary.

What I have said, these are all important parts of the Government's policy agenda. We intend to fight hard in the Senate. Our principal concern in the Senate is to prevent the Liberals from delivering a major assault on the Budget disciplines which the Government sweated over in preparing the Budget of May this year.

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I mean, if you look at some of those basic disciplines we brought about through the Budget, on spending, when we took over office the spending growth was running at four to five per cent under the previous government.

We brought that down to one per cent in the current Budget. On savings, as you know, our new initiatives were funded by the savings that we had made, some $33 billion worth of savings. And we landed at a point in the Budget whereby we've reduced the tax to GDP ratio to a lower level than the previous year and a lower level in frankly almost a decade, particularly against what was a high taxing government, the one which preceded us.

To get to all those points on reducing spending, on bringing about a very hard set of savings $33 billion worth and to produce an outcome on tax of the type that I've just described, by tax as a proportion of GDP is down in the first year of this Government. It's taken a lot of work but secondly it's been a necessary fiscal discipline given Australia's globally uncertain economic conditions. And the ones that we face.

The - in a time of global economic uncertainty the worst thing the Liberal Party can do is to hold to ransom the fiscal discipline of the Government by some, $3 billion, $4 billion, $5 billion, $6 billion dollars depending on how they feel on a particular day.

This is not the time to do that. As I said before, one of the reasons we have worked hard to produce a budget surplus of this type is not just to put downward pressure on inflation, downward pressure on interest rates, but to provide us with a fiscal buffer to deal with the challenges we may face in this uncertain environment.

And in a time of global economic uncertainty, the worst thing you can have is uncertainty on the home front delivered by an irresponsible party acting for populace reasons in the senate. That's why we're going to prosecute a very hard line, economic debate with the Liberals in the Senate with one objective in mind, to get this budget and its integrity upheld in the Senate because it's necessary in terms of the overall economic wellbeing of the country.

JOURNALIST: Hi, Prime Minister, Matthew Franklin from The Australian.

PM: Hi, Matthew.

JOURNALIST: I am interested in argy-bargy as well. The…

PM: I notice that from what you write, yeah.

JOURNALIST: Thanks. Look, I've seen State Governments, including, I think, the one that you used to work for openly, aggressively act - work against media attempts to provide any kind of scrutiny to the way - to relative performances of schools as Malcolm said we - the education unions hate this stuff. You've said today, you've laid out a series of principles and you've made clear that you have to now negotiate on them.

Can you tell us that the basic principles, putting aside the funding, of what you've outlined today are non-negotiable and that you will not be backing down either by - to demands from the states or the Labor movement?

PM: These are hard principles, Matthew, and Julia and I have spent a lot of time on this and her work in this area in recent weeks and months has been particularly intense. So we haven't pulled this out of thin air, we have thought about it, we have worked on it, we believe this is the correct way ahead for the nation, for the economy, given the productivity arguments that I ran through before.

But also in terms of life opportunities of the tens of thousands of kids affected by this.

So therefore, the principles we put forward are robust, strong, and we intend to adhere to them.

Whether states and territories agree with those, remains to be seen in the final analysis. But what we can do at the end of the day is fashion national policy partnerships, with governments, and if various governments choose not to receive these additional payments, I think the country will say, ‘be it on their heads’. But the reason we have designed this structure of national policy partnerships is precisely with this in mind.

The states, to be fair to them, and the territories, are doing a lot of good work in various of these areas, but they've encountered a lot of resistance as well. And that's why with those states which have a strong reformist inclination we intend to partner with them.

Through these partnerships, partner with them in a real financial way as well, make it more possible for them, but we can't shirk this agenda anymore. We can't just say it's all to hard and put our heads in the sand.

When I said at the beginning of last year that one of the most important things for me if I made it to becoming Prime Minister of this country was engineering an education revolution, we meant it. Not just in terms of the amount of money we

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invest in this system but the quality of the system as well. Every kid in the country deserves a decent start; it doesn't matter where they come from. Every kid in the country. And to the extent that it is possible with in our powers of the Commonwealth Government to deliver that, we intend to do it. It is a very high priority.

JOURNALIST: Michelle Grattan, from The Age. Mr Rudd, in the current economic downturn how high do you expect that unemployment might go? Do you think we could get to a situation where it has a six in front of it? And after your talks with the car industry this week, and given the job problems in that industry, do you think there is a case still for making the fall in tariffs that's been recommended by the Bracks Report?

PM: On the - we've been upfront as is the Treasurer and others about what we see to be a slowing in growth and employment across the economy. And that of course is consistent with what you see in many other developed economies around the world. On the question of the car industry, our approach, and I said this, I think as of the day I became leader of the Parliamentary Labor Party - I am a free trader, always have been, always will be.

And the reason I am is because protection like that ultimately doesn't help consumers particularly working families who are struggling to get the best deal possible with a very large purchase. We all know the history of that, shirts, shoes, over time the ability of families to be able to stretch their budgets further have all been enormously assisted by the deep reforms to tariffs which are engineered during the period of the Hawke and Keating Government.

So our attitude to the future of the car industry is very much one which depends on industry policy which I've never equated with tariff policy. And industry policy for us means investing in innovation. And I've said that from the beginning and I'll continue to say that as well. And that's why we've established a half billion green car innovation fund.

And it's funds like that in the future which will enable us to help industries innovate, secondly, to also innovate in directions which are consistent with the nation's other priorities, other environmental priorities. In the case of fuel efficient cars, reducing not just the carbon footprint but also helping to drive the family budget further as well.

JOURNALIST: Prime Minister, Karen Middleton from SBS Television. I just wanted to take you to a part of your speech where you talked about non-performing schools and needing to lift their performance and you suggested that in some cases they may need to be reorganised or even merged. It strikes me that that might be unpopular with some parents.

Here in the ACT, the ACT Government announced some year or so ago that it was closing and merging schools and there was uproar. And in the end it had to back down on some of those schools. So I am wondering, what do you say to parents who might be alarmed at the prospect that schools might be closed or be merged, especially in a time where they've got rising household costs primarily transport costs?

PM: First of all the proposed national partnership payments and agreements I referred to before, both on quality teaching and on funding arrangements with the most disadvantaged schools, these would be agreements with State Governments with education systems. And therefore definitions ultimately will lie with them about how they then implement these agreements on the ground.

The Commonwealth doesn't directly run the systems, we don't. They're run either through the independent school system with the Catholic Education System or though the state and territory systems. And that is the simple administer of reality.

So those decisions ultimately would be made local - locally. What we can do however, in partnership agreements, with states and territories and with the systems, is to outline clearly the criteria which may lead in that direction. No-one wants to merge a school with another school if you can possibly avoid it.

But you know if you're a bunch of mums and dads and you see through the transparency measures I referred to before the fact that against comparable schools elsewhere that your local school is performing really badly and has done so for many years and there hasn't been any real turnaround, we've got to look at some practical hard disciplines at the end of the day about what you're going to do about it.

You can either say, ‘well, let's hope like [inaudible] that something ultimately turns up or furthermore that you get new management into the school, or if that doesn't work then you've got to actually, for the sake of the kids, look at a different arrangement. But those decisions ultimately will lie with the systems themselves. What we'd be doing is designing the funding agreements to make that possible.

JOURNALIST: Hi, Mr Rudd, Phil Coorey from The Sydney Morning Herald. You may have just answered this question but similar to Karen's a lot of state or all states have a local system where you can only go to a school in your area.

So if - how - if you were to, quote, vote with your feet and you weren't allowed to, is that the State's responsibility or -and/or the Commonwealth's? And in that - in that theme, who would take accountability if a school needs to merge but the State won't do it for political reasons, is it the Commonwealth's fault or the State's fault?

PM: Well, we at the Commonwealth level have a responsibility to design clear cut policy and funding agreements with the

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states and territories. So the contents of those agreements, obviously, are the joint responsibility of both levels of government. The execution of the agreement on the ground, obviously, lies with the system which manages the schools. So they will make the decisions on the ground locally.

But if you see evidence, plainly, of a state and territory system which has signed up to a national performance partnership on quality - quality teaching, for example, where all the - and through the transparency reporting arrangements that we spoke about before, and you saw clear evidence that nothing was happening on the ground, despite the evidence being

presented, then that provides you with an opportunity at the federal level to act as well in terms of non-compliance with the basis of the agreement.

Now, a lot of this in the argy-bargy of the next few months will be nutted out with the states and territories. And I'm not pretending for one moment this will be easy. It'll be a complex negotiation. But we, the Commonwealth, have determined this is the right way to go and we are not going to take a backward step.

JOURNALIST: Paul Bongiorno, Ten News, Prime Minister. I'm just wondering what benchmarks we're going to use here. I noticed that some of your goals are out to 2020. By the time of the next election, what should have happened? For example, the brightest of the maths and science teachers, and this is a problem that all the school systems have, can leave the system, get three to four times the salary working in the private sector, away from education.

You say there's going to be a lot of argy-bargy and it'll be tough but the Commonwealth is determined. Are you as determined in this area as you are in health, where you've said if the states don't come to the party you'll take them over?

PM: One step at a time, Paul. I always believe in consultation - consultation - just cause you're an old lefty, consultation -talk about revolutions. The consultation first, a hardened negotiation and ultimately, of course, there are other devices available. But we're not canvassing those when it comes to education. I think we can still get there through the negotiating process that we've outlined. It will be tough and we're going to have to put money on the table. But as I've said from the very outset of our debate on the Education Revolution, from day one, January University of Melbourne 2007, I said we're on about lifting the quantitative investment across the range of education. From early childhood education through schools, through vocational education and training, through universities, through innovation, through R and D up to the highest ends of rocket science, we're into upping the quantitative investment.

But parallel to that, are qualitative disciplines, which is to measure the quality of that which is produced. And that applies here to the school system most critically. Because going back to, you know, the core of this debate, if we are serious about this nation having a robust economic future in the economies of the twenty-first century, and you look at what our competitor economies are doing around this region and the world and the radical investment programs they have in human capital, and in within the school systems, there is a grave danger of us being left behind.

I use this point again to go back to the cardinal principle. And that is, for us this is serious business. We intend to prosecute this with full vigour, knowing full well that there's going to be blowback on the way through.

JOURNALIST: James Grubel from Reuters, Prime Minister. You mentioned in your speech the Government's plans for emissions reduction, and we noticed in the past week or so business, particularly big business have come out and said they have great concerns about the Green Paper and the plans for the emissions trading scheme.

Is there a growing - is there a sense that the Government - that there is some sympathy for some of those complaints? Or do you think that big business isn't really doing enough at this stage to prepare for emissions trading from mid-2010.

PM: Well to use the term of the day, argy bargy is not restricted between the Government and the state and territory school systems. We also, we're having a fair bit of that with the business community as well. And that's natural and normal.

Just, you know, I just regard that as part of business. We've put out a Green Paper when it comes to the future of the Carbon Pollution Reduction Scheme. The reason it's called a Green Paper is that it's there to form a basis for negotiation, and that's why we're engaged, through various ministers of the Government, led by Penny Wong, but also Martin Ferguson, also Kim Carr and Simon Crean and others, in direct negotiations with individual businesses.

And we intend for this to be a real negotiating process. The reason for having a detailed framework out there through the Green Paper on the Carbon Pollution Reduction Scheme, is to focus the debate down to the points of real disagreement, and to work out what is the productive way forward.

And I think reasonable people will be able to achieve that.

What I detect, overall, from the business community is actually something quite good. None of them have said to me, so far, ‘oh, by the way, we don't want to act on climate change.’ None of them have said, ‘oh, by the way, all the science is wrong.’ None of them have said that. You roll the clock back a few years, that's probably what might have been the starting point.

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So I think there is a sense of genuine corporate or collective responsibility here. But we are into a detailed negotiation, and it will be tough and it will be hard. But as I said at the very beginning of the Carbon Pollution Reduction Scheme debate, if you are going to reduce greenhouse gas emissions, which we must, and if we are to be credible negotiators in the essential negotiations coming up over the next 12 months or so, to get a global deal, then this is the necessary course of action. It will never happen cost free.

This is not a cost-free business. Anyone who says that is misleading you. And I don't intend to say that. The question is, how do we do it. What is our pathway to the future on this. And what adjustments do we provide for households and for businesses on the way through. And this, again, is a high priority, a high policy reform priority for the Government in the period ahead.

JOURNALIST: Emma Macdonald from The Canberra Times. Mr Rudd, how is it an education revolution when you're following Coalition policies to threaten the states' and territories' education funding unless they introduce performance pay, principal autonomy, school comparisons, not to mention the fact that you're following the Coalition policy to dock welfare payments to truanting families?

I mean, it's hardly original, let alone revolutionary. And if they were such great ideas at the time, why did Labor at every level oppose it?

PM: Well what would be revolutionary for someone to actually do this, as opposed to just talk about it. You know, I've mentioned before in passing, how many reports did the previous Government deliver on all this sort of stuff over the last decade plus. I mean, there's enough to weigh down the lower archives of the National Library. But in fact doing something is quite a different challenge, and I just think we as a National Government have got a responsibility to act. I can't guarantee 100 per cent success on this score, but we intend to have a damned good go at it, let me tell you.

And the other question that you implied, or part of the question which you put forward, was how is it an education revolution to impose hard line disciplines on school systems. Well, if the alternative is elevated hand holding with state and territories and systems and to say that's kind of the way through, as opposed to being tough and hard headed about benchmarks for performance in the future, let me tell you the road that we'll take is the second one.

And why do we take it? Because kids out there going to average schools deserve every opportunity that kids at flash schools have. And this is the way through.

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