GST talks beginning of process: Abbott

Mr Hodgman and other state leaders will attend a retreat with Prime Minister Tony Abbott this week. Mr Weatherill wants to know how compensation would work and whether it could be locked in, although he doesn’t want to “chop off” debate.

“What I’ve indicated is that there should be a discussion about new revenue measures”, he told reporters.

But Treasurer Peter Gutwein says the government’s major focus will be on reclaiming $2.1 billion he claims was stripped from the state in last year’s state budget.

‘I think quite frankly, the state and the country are sick of it, ‘ he said.

Ms Aitchison said an increased goods and services tax would simply shift more responsibility from the federal sphere onto the states.

“Every time it looks like we’re heading towards a constructive discussion Joe Hockey bobs up to try and undermine the opportunity for reaching agreement”, Mr Weatherill said.

While state and territory leaders said Wednesday’s summit was about finding health and education funding gap solutions, the Australian Industry Group, ACOSS and the Business Council said the hoped the retreat would “approach the task of tax reform”. Yet, despite this, the Abbott government’s warnings in 2014 that fundamental reforms were necessary to shore up Commonwealth finances, and the fact that Commonwealth tax revenues have been eroded substantially by falling commodity prices, the appetite for reform appears lukewarm.

“Replacing these taxes with the extra revenue that would be raised by broadening the GST base and raising its rate should be a leading priority for tax reform”.

“[The GST] hurts those people on the lowest income the most because it represents a bigger proportion of their income”, Ms Aitchison said.

Instead he is proposing an increase in the Medicare levy to fund future health needs.

Federal Labor won’t have a bar of it.

“It’s not reasonable for the Abbott government to propose it, or for any of their apologists like Mike Baird to be advocating for it”, Victorian Treasurer Tim Pallas said. “So that’s exactly what I’ll be putting forward”. But while that had raised the issue of health funding, it also “masked the real issue”. She added that a higher rate would raise $30 billion a year.

A revenue stream of $20 billion is needed before 2020, he says, “to put our vital health services back on a secure footing”.