The 2025–26 Federal Budget marks a significant step forward for Australian schools, with record investment in education funding and a clear, evidence-based policy direction. And for school and system leaders, executive education professionals and teachers, the core message is unusually direct: this new education funding is sorely needed – but it’s also tied to change and reform.
…So this isn’t just about more money for schools. It’s about making sure every dollar is spent on proven strategies that help students: help them build strong literacy skills, help them catch up if they fall behind, and help them thrive in the classroom and well into the world of work.
Let’s break down what the Budget actually delivers, how it applies to literacy skills, and take a look at 5 practical, evidence-based ways your school can invest these funds in literacy for the greatest student impact.
Record education funding comes with a caveat: focus on results
The 2025–26 Budget provides $31.1 billion in recurrent funding across all education sectors in 2025, with an estimated $135.7 billion over the next four years. This historically large education funding increase is part of the Commonwealth’s 10-year Better and Fairer Schools Agreement, which commits to put each and every public school on the path to full funding under the Schooling Resource Standard (SRS).
The Budget also commits $407.5 million over four years to jurisdictions that have signed bilateral agreements for full and fair funding. This is designed to ensure that every school, regardless of location or background, receives the resources it needs to support student learning and well-being in an effective, holistic way.
But on this, the government is clear: this increased allocation of education funding is not a blank cheque. It comes with a set of specific requirements for reform and renewal, all aimed at improving student outcomes – and that leads us to the topic of literacy skills.
A primer on literacy skills in Australia
According to the 2024 NAPLAN data, around 1 in 3 exam-takers (so about 450,000 Australian children) didn’t reach the expected benchmark for literacy.
In fact, every state and territory saw at least 30% of students fall short of the standard across different year levels and tests. So we know that literacy intervention is needed off the back of this budget, and that it can’t come too soon, because low literacy equals low outcomes in education and beyond.
The game plan? Access, intervention and evidence-based teaching
This Budget’s required reforms are based on research and best practice, and are engineered to address the persistent gaps in literacy skills and learning that are fuelling those concerning NAPLAN results.
But what are education settings actually being asked to do?
1. Mandate evidence-based teaching practices
Schools receiving new funding are required to implement evidence-based teaching methods, including explicit instruction. That’s likely not a new phrase to any educators in the room: explicit teaching is a structured, systematic approach that research shows is highly effective for building foundational literacy skills, especially for students who struggle with the building-block skills of reading and writing.
2. Mandate Year 1 phonics checks
The Budget also requires all schools to conduct Year 1 phonics checks. Why? Because this assessment is engineered to identify students who need extra help with foundational literacy skills as early as possible. Early identification allows for early intervention, which is critical for a student’s long-term success.
3. Provide more individualised and intensive supports for students
Some of this additional education funding is ringfenced for interventions, such as small-group tutoring and targeted support for students who are behind in their literacy skills. These supports are proven to help students catch up and keep pace with their peers, and create strong, confident readers.
4. Bolster teacher recruitment and retention
The Budget includes funding for initiatives to attract and retain high-quality teachers, recognising that effective teaching is central to improving literacy skills for learners. This includes professional learning opportunities and support for teachers to develop expertise in evidence-based literacy instruction.
5. Promote and foster inclusive education
The Budget also emphasises the importance of inclusive education, ensuring that all students, including those with disabilities or additional learning needs, have equity of access to high-quality literacy instruction and resources, regardless of their background, additional needs or neurodiverse differences.
So simply put, this is a literacy Budget – it just doesn’t quite say so on the tin.
…And these requirements aren’t optional. They’re conditions for receiving the additional Commonwealth education funding, and they reflect the government’s commitment to lifting literacy outcomes for all students. Education Minister Jason Clare reinforced this in his Budget address:
“This is about making sure every school gets the funding it needs, but also making sure that funding is tied to the things that work-like phonics checks, small group tutoring, and explicit teaching, so every child can build strong literacy and numeracy skills.”
5 ways to invest Budget 2025’s uptick in education funding in literacy skills
Based on the Budget’s requirements and the best available evidence, we’ve put together 5 practical ways schools and other education settings can invest this new education funding in ways that strengthen literacy skills, and help boost results for learners at all stages:
💰 Expand small-group and individualised literacy interventions
Small-group tutoring and one-to-one support have been shown to help students make significant gains in literacy skills, especially in the early years. So use these new ranks of allocated funding to provide targeted support for students who are at risk of low literacy and low reading confidence. Look at students who display a low literacy risk through phonics and literacy checks, but don’t forget to pay adequate attention to cases picked up on by class teachers, too: sometimes, the learners who need literacy support the most are the ones who are successfully masking it, or have developed partial coping mechanisms for exams that hide a weakness in comprehension and confidence.
And how exactly would a school implement this? They might use funding to employ a literacy specialist who works with students flagged by the identification processes described above, providing daily or weekly sessions focused on boosting decoding skills, fluency, and comprehension.
💰 Invest in professional learning support for evidence-based literacy instruction
Allocate resources to train teachers in explicit teaching methods and structured literacy approaches. This Budget specifically mandates evidence-based teaching practices as a condition of funding, and ongoing professional development is key to ensuring these practices are embedded in every classroom, teachers are confident teaching to them, and students can benefit from a fully-realised framework that just works.
Again, schools could use their new funding allocation to bring in literacy experts for workshops, support teachers to complete accredited literacy courses, or establish professional learning communities focused on best practice in reading and writing instruction.
💰 Implement regular phonics and literacy skills assessments
On adopting the Year 1 phonics checks and other literacy assessments required by the Budget, and with phonics becoming even more of a focus, schools might invest more of their budgets in the phonics learning tools that underpin early literacy instructions in their classrooms – or look for new, evidence-backed systems to kickstart this new focus on the fundamentals.
Schools could even invest in assessment platforms that provide actionable insights for teachers, enabling them to adjust teaching strategies to meet student needs. Regular assessment provides data that can be used to tailor instruction, and monitor progress over time for an easier way to intervene early.
💰 Make sure that classroom resources are accessible
Many schools will choose to use some of this new education funding to ensure all students have access to high-quality, diverse literacy materials. With this Budget’s focus on equity of access to learning, we’re likely to see a big buying focus on things that can support those who may face barriers to learning. Inclusive resources help create a classroom environment where every student can engage with literacy learning, regardless of their starting point.
These kinds of supports include decodable texts and visual supports, new reading systems, and High-Low reading books that combine age-level interest stories with clearer, easier to comprehend texts, so that those with low literacy don’t get frozen out of reading by books that are aimed at younger students.
💰 Invest in literacy with reading pens!
…It’s a lot to take in. Isn’t there a way to keep it simple?
There is! Adding a reading pen like C-Pen Reader 3 to the learning process is a practical way to improve access for students who find reading challenging. These pocket-friendly reading tools support independent decoding and comprehension by providing immediate, individualised assistance. Just scan the tip of the pen across the page to get started, and decode multi-modally with super-speedy audio feedback proven to boost skills and confidence!
And although they’re a fun piece of tech, the most important thing to remember is that reading pens deliver: the Budget’s principle that increased funding must deliver better outcomes has some schools worried about provision choices, but Reader 3 makes those choices clear. The proven results of text-to-speech literacy interventions make improving access and supporting differentiated instruction far easier, and meet the requirements for evidence-based intervention whilst delivering measurable improvements in literacy skills.
Find out more about how Reader 3 could support your Primary Learners or Secondary Learners!
The bottom line: it’s time to look at literacy where you are
The 2025–26 Federal Budget’s key takeaway is clear and grounded: new education funding is directly linked to reforms that support literacy skills, including explicit teaching, early assessment, and targeted intervention. By investing these funds in evidence-based strategies and practical tools, schools can deliver on the government’s goal of lifting literacy outcomes for every student.
Make the most of new funding with Scanning Pens!
We know that navigating a new funding landscape is complicated, especially when it’s combined with all the other responsibilities of teaching, leading or balancing the books. But you don’t have to go it alone!
Our team of education experts are on-hand five days a week to support you in making the right decisions and maximising the budget you have at your disposal. From targeted classroom solutions to providing dependable, proven reading support for thousands of learners across your state, we’re here to take the hard work out of education funding and provide you with a complete breakdown of everything you need to stay ahead of the curve.
Budget 2025 ups the pressure on schools to deliver literacy results – but we're here to help you decide on the right solutions for your setting every step of the way. You can get in touch with us on:
