Key Points:

The Prime Minister is hinting that schools may be given more money to help them deal with growing financial pressures.

Speaking shortly before her departure for Antarctica, Helen Clark told the Herald that education - and in particular schools - would be a priority spending area for the Government this year.

"I think it's really the education area [where] the initiatives need to go," she said. "At some point in this term we will have to address the operational grants, for example."

Late last year the Ministry of Education highlighted significant financial stress at the country's schools.

More than two in five schools were in the red despite managing their money well and raising extra funds from parents.

The ministry's review predicted the situation was likely to worsen as student numbers dropped, new government policies were introduced and compliance costs increased.

Operations grants make up about 20 per cent of school revenue, with as much as one-third of overall revenue now coming through parent "donations", fundraising or enrolling international students.

Financial stress on schools has grown as information technology requirements rise, compliance costs increase and as the curriculum changes.

Principals Federation president Judy Hanna yesterday welcomed the Prime Minister's hint of more cash, but warned that any increase in operational grants needed to be "substantial". She said the ministry's review of operational grants proved there was a need for immediate action.

"Schools this year are expecting an increase across the board, but particularly for admin," Mrs Hanna said.

The formula for calculating school funding dated back to 1989, when her school had one phone line and a typewriter, she said. Many schools now had four lines, as parents' expectations grew for schools to do things such as phone to report absent pupils.

Managing the finances of a school was also more demanding, Mrs Hanna said, and many were paying tens of thousands of dollars each year for IT support. "We have to pay that out of our ops grant."

Aside from targeting education, the Prime Minister said 2007 would largely be a year of policy implementation for the Government.

Labour's election policy of 20 hours of free early childhood education for 3- and 4-year-olds is scheduled to be launched on July 1.

A large number of policy proposals, including several on climate change, have gone to the public for consultation. Helen Clark said sustainability would be the Government's over-arching theme for the year.

That is a clear reference to both her strong climate change push and to how the Government may tackle the issue of personal tax cuts.

Finance Minister Michael Cullen argued just before Christmas that large tax cuts would not be economically sustainable and the Prime Minister said the real focus on tax would be on changes to the business regime in this year's Budget.

Helen Clark also highlighted several Auckland issues needing addressing this year.

An attempt to get "more coherent" regional governance was among them, as the Government decides how to respond to a reform proposal put to it late last year by the region's councils.

The Prime Minister said rail services in Auckland were another issue to be dealt with, particularly questions of when to electrify the network.

The question of a stadium to host the 2011 Rugby World Cup also needed to be sorted out, she said.

Helen Clark said the Government would continue to put strong emphasis on economic growth and transformation, and health. The foreign policy agenda would also be busy.