Prime Minister Tony Abbott insists he and state leaders are committed to solving problems, rather than starting fights, about Australia's system of government.
"Rightly we have big ambitions for our country," he told a meeting of the Council of Australian Governments in Sydney on Thursday, the day after a historic leaders retreat discussed reforms to the Federation.
The leaders unanimously agreed to focus reform on health, education, infrastructure and housing.
Mr Abbott praised the spirit of the retreat, saying it was about "solving problems rather than starting fights".
That same spirit would be needed for a long and at times complex process to address the challenges facing government, he said.
"We want to be absolutely sure that we are not the generation of leadership which lets our people down."
While Australia had one of the most efficient healthcare systems in the world, leaders agreed that health was a top priority for all levels of government, with a serious funding challenge made more difficult by an ageing population.
The retreat was told that state governments faced a funding shortfall of at least $35 billion a year by 2030.
Separate proposals to increase the GST rate and the Medicare levy to plug the hole have been left on the table for further discussion.
There will be a new focus on primary care and keeping people out of hospital.
The leaders agreed the chronic care issues of diabetes, heart disease and mental health required particular attention.
There was also recognition of the need to consider working towards extending Medicare to cover treatments in hospitals based on efficient pricing.
The leaders backed the abolition of a GST exemption for online overseas purchases under $1000 and the Northern Territory's bid to becomes Australia's seventh state.
WHAT THE LEADERS RETREAT DECIDED
* Broaden the GST to cover overseas online transactions under $1000.
* Keep tax changes on the table including increases to the GST rate and the Medicare levy as a way of addressing future shortfalls in health funding.
* Support Northern Territory's bid to become Australia's seventh state by July 1, 2018.
* Shift responsibility for vocation education training to the Commonwealth so long as states and territories could elect to remain TAFE providers within a national system.
* Slash duplication between Commonwealth state housing agreements and the federal government's provision of rental assistance to low-income earners.
* Number-crunch the scale of future funding shortfalls in areas such as health.
(Source: Australian Leaders Retreat Communique)
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