Schools will be a political battleground this year as states fight attempts by the Conservative federal government to make their schools push "traditional Australian values", change the way they teach reading, and accept more national tests.
Prime minister John Howard - who was re-elected in October and whose party controls both houses of parliament - also plans to demand that schools issue reports "in plain English".
But the eight state and territory governments, all run by the opposition Labor party, have strongly objected, arguing that Canberra has no right to interfere in the way schools operate.
States have been told they must comply with federal demands if schools are to get their share of A$31 billion (pound;12.4bn) in federal education funding over the next four years.
The first target for the federal government is reading: federal education minister Brendan Nelson has announced an inquiry into the way it is taught.
This follows a fierce public debate over whether teachers should use phonics or a "whole language" approach.
Dr Nelson said the inquiry would examine international research on various reading methods, teacher training and classroom practice for teaching reading.
The inquiry would also look at how reading skills were tested, he said. He wants schools to issue "plain-English" report cards with grades of A, B, C, D or E (but no F) that also indicate how the student compares against national standards and against others in the same class.
State and territory governments have already accepted national numeracy and literacy testing in Years 3 and 5 (aged nine and 11 respectively) at primary school and at Year 7 in secondary school.
Mr Howard said further national tests in English, maths, science, information technology, and civics and citizenship would be introduced for pupils in their last year of primary school, and for those in Year 10 at secondary school. Results would show parents how their offspring were doing against national benchmarks.
"It is time we made a concerted effort to place parents more firmly at the centre of schooling," Mr Howard said.
He claimed many student report cards were written in inaccessible or meaningless language that provided no guidance to parents as to how their child was actually progressing.
He said that parents also expected schools to foster traditional values such as care and compassion, responsibility, courage, honesty and courtesy.
These values were part of Australia's democratic way of life. "We strongly believe that the teaching of traditional Australian values should be a priority in all schools. Every Australian child needs to have an understanding of these values as part of their schooling," the prime minister said. "The government will spend more than A$29 million (pound;11.6m) over four years to showcase best practice across Australia, to develop values-education resources, and to enable every school to hold a values education forum involving parents and the school community."
In another move that has antagonised the states, the government is insisting that principals be given the right to veto staff appointments to their schools - at present they are appointed by the state education department. "It is time that expensive bureaucracies and the teachers'
unions got out of the way and let schools manage their own resources and staffing arrangements," Mr Howard said.