The Howard government’s 2004-05 budget was generous to education, with funding increasing by 7% or $883m. With inflation running at around 2.5% and population growth tipped to be 1.2%, this is a significant real increase, enough to see government spending on education increase as a share of our national income (which is tipped to grow by around 6%). But the budget papers contain what would appear to be a curious education funding anomaly, which could easily slip past the undiscerning eye. It would be reasonable to assume that higher education would account for most of the $883m increase, for after all that is the only education responsibility that falls solely on the shoulders of the Federal government. Yet higher education only accounts for one-third of this growth. The single largest contributor is schooling, that part of the education system which is primarily a State responsibility. Over the next twelve months, the Federal government will spend an additional $576m on schools, and this will account for almost two-thirds of the increased education spending.