Treasurer Peter Costello says the Government will maintain all funding previously allocated to the Aboriginal and Torres Strait Island Commission (ATSIC), which it is abolishing.

After ATSIC's scrapping, all measures will be delivered by mainstream agencies.

Mr Costello says savings made from ATSIC election processes, wages and administration will amount to about $61 million, which will be redirected to domestic violence programs in Indigenous communities.

He says there will be "more dollars on the ground in Aboriginal communities" as a result of the changes.

The Government says its spending on Indigenous affairs will reach $2.9 billion in 2004-05. There is additional funding in the Budget for anti-family violence, employment and education programs.

Funding for Indigenous education will be increased by $18 million in 2004-05.

A statement from the Government says that from January, the shape and direction of the programs will change significantly as a result of funding being directed to those initiatives that are demonstrated to provide real outcomes for people living in remote areas.

Reconcilliation Australia will receive $15 million over four years to allow it to expand and continue its activities.

Its main focus is promoting and encouraging the process of reconciliation between Indigenous Australians and the non-Indigenous community.