The Government says it is putting quality before quantity with increased education funding announced on Wednesday.
In a pre-Budget speech, Education Minister Hekia Parata, said the Government will increase school and early childhood education spending by $511.9 million over four years in next week's Budget.
The funding is in addition to $304 million being spent on professional learning and development for teachers in primary and secondary education over that period.
Ms Parata says New Zealand's education system is one of the best in the world, but it is not working well for one in five children.
To address that, the Government will require new teachers to have a post-graduate qualification and new principals to have a specialist pre-principalship qualification.
It will also develop an appraisal system for judging the quality of teachers, which Ms Parata says could be used to allocate performance pay.
Wednesday's announcement also included changes to student-teacher ratios which will lead to larger classes in the middle years of schooling.
Hekia Parata says that, given the current economic climate, the Government has had to make some trade-offs and will be making a small change to the ratios which will save $43 million a year by keeping a lid on growth in the number of teachers.
"We're not reducing teachers. Ninety percent of schools will lose or gain up to one fulltime teaching equivalent, so clearly 10 percent will have a bigger effect, but the vast majority over 2000 schools will not have a major impact."
From Year 2 to Year 10 the teacher-student ratio will be standardised at 1 to 27. At present, it varies between 1 to 23 and 1 to 29.
Ms Parata says the saving will be reinvested in education and the Government is opting for better teachers rather than more.
The minister says the funding announced on Wednesday takes the Government's total investment in early childhood and schooling to $9.6 billion for 2012-13 and is the fourth consecutive Budget in which the Government is increasing overall spending on education.
Further details of new investments in education will be announced in the Budget on Thursday 24 May.
False economy, say Greens
The Green Party on Wednesday criticised Government for taking what it calls bad advice from the Treasury over increasing class sizes.
Green MP Catherine Delahunty says it is a false economy to take resources away from Year 2 to Year 10 because these are the ages where students engage with learning.
The Government is signalling it may introduce performance pay for teachers as part of an appraisal system. But Ms Delahunty says this is focusing on blaming teachers and offers nothing to the education system.
Policy driven by Treasury - Labour
The Labour Party says the Government's education policy is being driven by Treasury rather than by what is right for teachers and children.
Labour's education spokesperson Nanaia Mahuta says that will result in job cuts.
Ms Mahuta also says performance pay will erode trust and collaboration in schools and change the culture of teaching.
Principal says class size increases are significant
President of the Principals Federation Paul Drummond says increases to class sizes will harm education.
Mr Drummond, who is the principal of Tahunanui School in Nelson, says the change is likely to cost his school at least one fulltime teaching position and increase class sizes by about two students per class.
Mr Drummond says increasing class sizes is short-sighted.