The biggest news for the sector is the $11 billion Education Investment Fund, one of three massive new funds generated from the budget surplus. The EIF is aimed at capital expenditure, renewal and refurbishment in universities, research facilities and major research institutions.

The Minister for Education, Deputy Prime Minister Julia Gillard, said the EIF will have a board to advise her and Senator Carr on the relative merits of funding applications. No money will be available in the 2008-2009 financial year to allow for the results of the Higher Education Review.

Professor Kurt Lambeck, president of the Australian Academy of Science, said the EIF, which has incorporated the previous government's Higher Education Fund, will now include the vocational sector, "so it remains to be seen whether universities will be better off".

"What has changed is that there is a greater commitment to increasing the size of the funds in the future and to allow expenditure of part of the capital if seen to be appropriate," Lambeck said.

"The Academy welcomes many of the new spending announcements from last night's budget, but has some concerns as well, particularly in relation to stretched funding time lines and cuts to Australian research institutions.

"It makes sense to defer new funding until the myriad of review committees announced by government these past six months have reported back. But it makes no sense if in the meantime our R&D capabilities have been strangled."

In health, another of the big new funds is the $10 billion Health and Hospital Fund, also aimed at infrastructure and capital works. Investments would be made in health and hospital facilities; medical technology and equipment; and major medical research facilities and equipment, including projects to support better links between clinical research and clinical practice.

Cancer has been targeted, with a new bowel cancer screening test being offered for free to people turning 50 between 2008 and 2010; $15 million over three years for independent clinical trials of drugs and research into cancer treatment and care; $50 million for the new Comprehensive Cancer Centre at the Royal Prince Alfred Hospital in Sydney; $15 million to set up two dedicated prostate cancer research centres; $15 million to build a children's cancer centre at the Women's and Children's Hospital in Adelaide; $15 million for another cancer centre at the Austin Hospital in Melbourne; and $5.1 million for the National Centre for Gynaecological Cancers.

Other savings include $147 million over five years by combining the functions of Invest Australia into Austrade to form one organisation taking care of inward and outward investment.