Prime Minister Tony Abbott is impressed by a "terrific spirit" among the nation's leaders for their one-day retreat.
Speaking ahead of the meeting of premiers and chief ministers at the Victoria Barracks in Sydney, Mr Abbott said the group was determined to look for solutions to reshape the federation rather than to pick fights.
"It is a good, strong federation, but it is not perfect and our objective in the next day or so is to talk about some of the more substantial changes that we can make to deliver better services for a better Australia," Mr Abbott said.
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