That means transferring all school education policy and funding responsibilities to the states.
The commission says the states should hold annual commonwealth funding in three separate and non-transferable pools for government, non-government and Catholic schools.
It would then be up to the states to dole out the money.
They would be required to publish how funds are allocated, take part in national and international testing and reveal how students are performing.
The commonwealth will spend $12.9 billion in 2013-2014 and the commission doubts the projected step-up in funding over the next decade – thanks to Labor’s Gonski reforms – has been sufficiently justified.
Increasing funding did not necessarily equate to better student outcomes, it said.
What mattered most was how schools and classrooms were run.
If the commonwealth went down the commission’s recommended path it could also save money or reinvest what was saved from a significant reduction in the size of the federal education department.
The commission also wants the federal government to vacate the vocational education sector by abolishing all federal programs.
Instead the states would be given a single annual lump sum on the proviso they meet minimum requirements for national reporting and quality assurance.
On higher education, the commission says university students should pay more for their degrees, and the interest rate on their HECS debt should be increased to reflect the full cost of providing loans.
As well, the wage threshold for repayment should be lowered from $51,309 to the minimum wage of nearer $32,500.
However, a lower starting repayment rate – 2.5 per cent – would soften the blow.