Mike Baird's bold intervention to overcome a political deadlock over the GST may not get past this week's leaders retreat.
Business groups have rushed to support the NSW premier's proposal, which would lift the GST to 15 per cent from 10 per cent. The rate has been unchanged since it was introduced 15 years ago.
Prime Minister Tony Abbott won't say whether he backs his Liberal colleague but is encouraged that premiers are putting forward ideas for Wednesday's meeting designed to shape the future of the federation.
South Australian Premier Jay Weatherill says while he believes there should be a discussion about the GST at the meeting, he doesn't support a rate increase as a way of funding increasing public healthcare costs.
"What I've indicated is that there should be a discussion about new revenue measures," he told reporters.
Mr Weatherill has put on the table a proposal to expand the GST to financial services.
Mr Baird believes a GST rate increase is the best way to deal with a projected $35 billion shortfall in health funding in 15 years.
"I know that's not popular," he said. "I know that's not something that people want to talk about, but unfortunately we must."
Mr Baird's proposal would include compensation for households earning less than $100,000.
Opposition Leader Bill Shorten said Mr Abbott had forced the states into the latest position after his government's first budget stripped $80 billion in future schools and hospitals funding from the states and territories.
"The real problem with a Liberal GST ... is that it's going to increase the cost of living pressures on Australian families," he told reporters in Perth.
Any change needs unanimous support from the states and territories but that seems unlikely, with the Victorian Labor state government putting its foot down.
"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.
Instead he is proposing an increase in the Medicare levy to fund future health needs.
West Australian Treasurer Mike Nahan is more focused on securing a change to the way the GST revenue is distributed.
Australian Chamber of Commerce and Industry chief Kate Carnell said it made sense for the GST to do more of the heavy lifting as an efficient tax. She added that a higher rate would raise $30 billion a year.
The group representing chartered accountants believes the retreat should take Mr Baird's proposal further by broadening the base of the GST to cover everything. This would raise a $265 billion over four years, it estimates.
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