South Australian Premier Jay Weatherill says the states are being left to "swim alone" now that the Turnbull government has backed away from a GST hike.
South Australian Premier Jay Weatherill has blamed conservative forces inside the Turnbull government for what he says is an about-face on the GST.
"It's a massive shift in rhetoric," the Labor leader told ABC radio on Monday of rising sentiment within the federal coalition that the case for hiking the GST hasn't been made.
Prime Minister Malcolm Turnbull and other cabinet ministers have said they are yet to be convinced about a changed tax mix that includes a higher GST.
"Conservative forces within the Liberal government have decided that Malcolm Turnbull isn't going to make an attempt to fill the health and education hole," Mr Weatherill said.
He said the states were being left to "swim alone" in solving a problem the federal government created in its 2014/15 budget when $80 billion was cut from promised Labor funding for schools and public hospitals.
Despite copping criticism from federal Labor about his campaign for a GST hike, Mr Weatherill said he was relaxed about a decision to drop the plan.
But the federal government could not ignore that there was still a funding hole to fill.
Finance Minister Mathias Cormann said it was up to the states to take responsibility for the efficient and effective running of schools and hospitals.
"Obviously if we were convinced we would have made a decision by now."
He echoed Mr Turnbull's view that he and others in the government had yet to be convinced or persuaded about a tax mix that included raising the GST.
"Obviously if we were convinced we would have made a decision by now," Senator Cormann told reporters in Canberra.
Deputy Liberal leader Julie Bishop also endorsed the prime minister's position, saying cabinet would deal with the evidence before making any decision.
Labor frontbencher Doug Cameron accused the prime minister of abandoning Treasurer Scott Morrison and big business.
"He is now the bedwetter-in-chief of the Liberal party," he told reporters, referring to a label imposed on coalition backbenchers nervous about the electoral consequences of a hike in the GST.
'Ticking time bomb'
But the Business Council of Australia warns there is no hope of delivering personal income and corporate tax cuts without a higher GST.
"If the GST is not part of a total tax package, the nation's degrees of freedom to make a real impact on tax relief will be very limited," chief executive Jennifer Westacott wrote in the Financial Review.
At the same time Ms Westacott took a swipe at both sides of politics for allowing the GST to dominate the tax-reform debate.
She warned an escalating scare campaign was a "ticking time bomb" that risked blowing up the entire debate.
"I am concerned that tax reform runs the risk of being the latest victim of Australia's dysfunctional political debate, and every single Australian will be the loser as living standards decline," she said.
Nationals MP David Gillespie, who supports a higher and broader GST, warned against any retrospective changes to superannuation tax concessions.
Dr Gillespie, who has asked the Parliamentary Budget Office to model the impact of a broadened 15 per cent GST, said superannuation funds were not a "little piggy bank" to go raiding.
