South Australian premier Jay Weatherill says Australia's federation isn't broken but it's under strain, making GST reform and road charging all the more urgent.
Mr Weatherill plans to take a four-point plan to the commonwealth and state leaders' summit in Sydney later this month, calling for reform to education, health care, roads funding and housing.
He said he'd raised his proposals with other premiers and state ministers.
"I'm an optimist. I think you have to be to be in this business," he told the National Press Club in Canberra.
The Labor leader said states and territories were the next frontiers for reform.
"Our federation isn't broken, but it is under considerable strain," he said.
The time has arrived for Australia to consider major, not modest reform, at the upcoming leaders' retreat, he said.
Under Mr Weatherill's proposals, state and territory governments would take responsibility for all education from birth through to the end of secondary schooling, with the commonwealth responsible for higher education and vocational education and training.
In the difficult area of health policy, he proposes sharing of responsibility with a focus on early intervention and prevention.
For road and infrastructure funding, there would be a national heavy vehicle road user charging system run by the commonwealth.
State-based registration and federal-based fuel excise charges would be replaced by a scheme charging according to vehicle mass, distance travelled and location of travel.
Mr Weatherill said that would charge according to actual road use, with proceeds invested in new roads and other works.
He said federal housing assistance did nothing to improve the actual supply of housing.
Under his proposal, states would access funding from the home owner grants and rent allowance, giving them far greater ability to improve housing supply.
As well, states would manage all direct housing and homelessness assistance.
He opposed lifting the rate of GST or extending it to food, but backed imposing the GST on financial services which would raise an extra $3.6 billion a year to help fill an $8 billion a year shortfall in funding for the states.
"I believe we've reached a point in the life of our nation where we cannot afford to put off this discussion any longer," he said.
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