Mr Turnbull's told ABC Radio that a powerful case could be made for state's funding public education if they raised income tax.

"I suspect no federal government would retreat from funding and continuing to support the non-government school sector because there would be a concern that they would not get a fair go from state governments who obviously would have a competing interest with their schools,'' he said.

"But in terms of state schools, state education, government schools, if the states had the money, if they had the money from a share of the tax base, would they not do a better job managing those schools themselves?

"That would be a question to ask the education ministers: does the education minister in Canberra know better how to run a primary school in Tasmania or South Australia or Western Australia than the education minister in those states?"

Senator McKim described Prime Minister Malcolm Turnbull's suggestion that states could be given the responsibility for funding state schools if they were able to raise a portion of income tax as an ill advised thought bubble.

''It will entrench inequality in Australia. It is basically washing his hands of responsibility for public education and it would pit education sectors against each other,'' he said.

"It is basically a thought bubble with no consideration that would massively disadvantage public education compared to non-government education but also would significantly disadvantage Tasmania.

It might be news to Malcolm Turnbull but Victoria is not the Southern-most state in Australia, we have a state here that would be massively disadvantaged by both of the major proposals he's suggested in the last few days.''

Treasurer Peter Gutwein said he had not seen detail on the proposal and referred it to Education Minister Jeremy Rockliff, who is expected to issue a statement on Thursday afternoon.