Unions have slammed the Federal Government's new school transparency scheme, calling it a distraction to the funding crisis in public schools.
The Prime Minister has announced plans to publicise more information about schools, like the socio-economic background of students and quality of teachers.
But Angelo Gavrielatos from the Australian Education Union says it ignores the need for a $1.5 billion funding injection.
"We do not need a political sideshow in the form of 'schools watch' as occurred today," Mr Gavrielatos said.
"Let's commit to a world class public education system...to ensure that every child in this nation can achieve to their fullest potential."
Mr Rudd says he expected some resistance but school performance reporting will be a condition for reaching an education agreement with the states.
"We will be making agreement on individual school performance reporting a condition of the new national education agreement to come into effect from the first of January, 2009," he said.
"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 have been struggling for some time."
Mr Rudd said he could not understand why public institutions, such as schools, should not be accountable to the community that funds their salaries and running costs.
"We should not tolerate underperformance. It damages 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."
The prime minister also pledged to establish new standards to reward school principals and the best performing teachers and fund 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," he said.
"Currently, most teachers reach a salary ceiling at around $75,000. If they aspire to earn more they must leave the classroom.
The government needed to send a message to university students and experienced teachers that teaching would be properly rewarded, Mr Rudd said.
"To make a real difference, we anticipate that governments will need to commit to additional investments of around $500,000 a year for an average-sized school."
The PM also promised a national security statement will be delivered during this parliamentary session.
There were many emerging challenges to national security including energy security and water scarcity, he said.
“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."