The states and territories need to consider raising their own taxes if they want more money to fund schools and hospitals, Prime Minister Malcolm Turnbull says.
"The states have got themselves into a way of thinking that every time they need more money, they just go to the ATM of the federal government," he told Radio 5AA in Adelaide on Friday.
They could not disclaim responsibility for raising revenue.
"They have got to be prepared ... to go to their citizens and say, for example, we need to raise more money to spend on our schools and our hospitals and we are going to increase this or that state tax," Mr Turnbull said.
The federal government contributed about 40 per cent of the money for hospitals, but the states ran them.
"They have got to do the heavy lifting in terms of getting the maximum health bang for the taxpayers' buck."
The states had some of the most efficient tax bases, such as land tax and payroll tax, in Australia, Mr Turnbull said.
But stamp duties on real estate and insurance contracts were the most inefficient tax bases.
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