Funding for schools will increase by $361 million over the next four years, Education Minister Steve Maharey says.
The money will be split between funding for teachers and school resources.
Mr Maharey said a priority would be putting 455 extra teachers into primary schools to meet the Government's election promise of lower teacher to new-entrant pupil ratios.
"As a result of this many primary schools will see noticeable staffing improvements."
He said the extra teacher numbers would build on 3040 new teacher positions established since 1999.
Schools' operational funding would increase by $95.6 million over four years to keep ahead of inflation.
"This budget continues Labour's drive to ensure our school system remains among the best in the world."
Mr Maharey said $33 million over four years would go towards better technology for schools.
There would be a range of initiatives including making internet access easier and more secure, providing satellite broadband to remote schools in the Chathams and providing access to more on-line education resources.
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Early childhood education funding will rise by $162 million over the next four years.
Most of the money is earmarked for implementation of Labour's election promise of 20 hours' free early childhood education for three and four-year-olds.
About $30 million will go towards higher funding rates for providers to recognise rule changes requiring a greater level of qualifications in the sector.
Playcentres would also receive a $4 million boost over the next four years to help with administration costs.
Education Minister Steve Maharey said Labour's 20-hours-a-week policy would benefit 92,000 children in its first year.
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The tertiary sector will soak up $166 million in new operational funding in the next four years as the Government boosts several training and research initiatives.
Tertiary Education Minister Michael Cullen said the funding was geared at making learning more affordable and boosting workforce skill levels.
About $33 million would go towards improving the basic literacy, numeracy and language skills of the workforce.
This would be delivered through industry training organisations.
Dr Cullen said an additional $58 million would go into industry training over the next four years, while $31 million would go into widening student allowance eligibility and increasing the number of bonded scholarships.
The Government's Performance Based Research Fund for universities will get $23.7 million over the next four years, in line with Labour's election promise of lifting its value to $250 million by 2010.
Dr Cullen said another $7 million would go towards research in "critical areas" such as nursing, education and information technology.
- NZPA
<i>Budget 2006:</i> Pre-schoolers through to tertiary students stand to gain
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