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The $1.6b will include $370 million to fund 1500 new teacher places - about $70m more than National had set aside. A further $590m would go into early childhood education.
That left $204m over four years for a 1.6 per cent increase in the funding schools get for their day-to-day running costs - $43m more than in 2017 but short of what schools might have hoped for.
Finance Minister Grant Robertson defended the size of the increase, saying it was an increase and Labour was allocating funding to other areas in schooling that impacted on operational funding, such as learning support for children with learning challenges.
The Budget also sets aside new capital investment for school property of $395m, most of which will go toward funding new schools and more than 200 new classrooms while $62m will go to Christchurch schools.
That is about one third of the $1.1b shortfall identified by Hipkins in the lead-up to the Budget when he accused National of failing to fund and plan for population growth.
In total, the education budget will be $12.26b, up from $11.85b in the year to June.
Hipkins said it was a "solid start" after tighter investment over the past government.
EARLY CHILDHOOD EDUCATION
The Budget allocates $590m to fund more places and allow for a 1.6 per cent increase in funding for early childhood centres.
Education Minister Chris Hipkins said the $105m spend on increasing that funding would help take the pressure off more than 4000 centres and 200,000 children.
He said it was the first universal cost adjustment to the rates paid to centres since 2008 and described it as a "first step".
"The 1.6 per cent funding increase is a fiscally responsible adjustment and is the first step in our plan to lift ECE quality."
About $483m would be to meet increased demand and population growth - about $130m more than the former National Government had funded for.
• $1.6 billion more in operating funding and $334 million in capital funding.
• Education budget will be $12.26b, up from $11.85b last year.
• $395m to build new schools and classrooms. Includes $62m for Christchurch schools rebuild and $332m nationwide.
• $204m for a 1.6% increase to schools' operational funding and to cover school roll growth.
• $370m to fund 1500 new teacher places by 2021 ($70m more than National funded).
• Early childhood education: $590m to fund more places and a 1.6% funding increase for ECE centres from January 2019.
• $272.8m for learning support such as teacher aides, ORS and early intervention.