The current system which dictates commonwealth-state relations is in need of a massive overhaul, NSW Premier Gladys Berejiklian says.
Modern federalism should involve fewer partnerships, less red tape and a fairer carve-up of GST revenue for states and territories.
Ms Berejiklian will outline her vision to shake-up the nation's oldest governing principle during her first address to the National Press Club as premier on Wednesday.
"The truth is modern federal-state relations are clunky and now thrive on mediocrity," Ms Berejiklian will say in Sydney.
The challenges NSW deals with, including congestion, housing affordability and population growth, are simply different to those faced in other parts of the country, the premier argues.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
"Too often I have witnessed in frustration Ministerial Council meetings where the ACT with a population of 400,000 - not much more than the population of Blacktown Council in western Sydney - has an equal voice with a state of 7.7 million," Ms Berejiklian says.
"The people of NSW should not continue to be held hostage to a lowest common denominator approach that privileges the parochial interests of small populations."
The constant COAG spats on issues such funding for schools and hospitals further stalls reform.
Ms Berejiklian says she wants fewer and less prescriptive agreements with the federal government, and more trust.
"If we want to put our national interest first we should have more bespoke arrangements that allow each state to progress to its full potential and make sure good, reforming governments feel incentivised to work harder and faster," she will say.
A better approach could be a system of "earned autonomy", the premier suggests.
Ms Berejiklian will also use her address to again push for a per capita model in the way GST revenue is divvied up between the states.
The Turnbull government has already announced a review into the distribution model, which could see NSW losing about $18 billion over the next four years in GST to the other states.
