States will be forced to sign up to the Turnbull government's plan to lift student achievement or risk losing commonwealth schools funding under new laws.
In legislation introduced to parliament on Thursday, the government has outlined how it plans to bring all schools onto a single, needs-based model by 2027.
It intends to put an extra $18.6 billion into schools over the next decade.
The legislation drastically overhauls the Australian Education Act passed as Julia Gillard's final act as prime minister, making it a condition of funding that states and territories sign up to a new national agreement on schooling.
This is yet to be negotiated, but is expected to be based on recommendations from a new review by businessman David Gonski of the best way to spend money to help students excel.
States would be prevented from reducing their share of schools funding below 2017 levels.
"The commonwealth does not own or operate a single school so it should not be the case that state and territory contributions to school funding decline while commonwealth funding grows," assistant education minister Karen Andrews told parliament.
The bill's explanatory memorandum says the existing Act calculates funding using six different methodologies, creating inequity and confusion.
"This means students with the same need in the same sector are treated differently because of the state in which they live," Ms Andrews said.
Under the new plan, commonwealth funding will move to 80 per cent of a base per-student amount plus loadings for all private schools and 20 per cent for all public schools.
The government is also trying to head off a row with education groups by guaranteeing a minimum annual growth rate.
The bill includes a 3.56 per cent increase to the base per-student amount for 2018, 2019 and 2020.
From 2021, it will increase each year in line with a combination of wages growth and inflation, but there will be a minimum lift of three per cent.
Education Minister Simon Birmingham said that should give schools confidence funding will keep up with costs.
"We want to make sure that there is no question around the certainty that our model can give all Australian schools to plan for the next decade and beyond," he said.
"I am committed to stopping the school funding wars and I urge all parties to end their scare tactics and stop their campaigns for special treatment."
The Catholic sector has been up in arms over the funding changes, which it says will lead to massive fee increases and possibly school closures.
Treasury figures show the SRS should grow by 3.3 per cent a year beyond 2021, meaning funding to Catholic schools will grow by an average 3.5 per cent over the decade once the needs of their students are taken into account.
The new laws also dump the power of the minister to give all schools within a system - such as a state's Catholic schools - the same classification of socio-economic status.
Instead, each school will get its own SES score based on its actual student body and funding will be calculated accordingly.
