Senior ministers have thrown their support behind Prime Minister Malcolm Turnbull, after his contentious plan for income tax was rejected at Friday's Council of Australian Governments (COAG) meeting in Canberra.

Key points: Bill Shorten labels Turnbull 'arrogant' for thinking proposal would gain support

Bill Shorten labels Turnbull 'arrogant' for thinking proposal would gain support Annastacia Palaszczuk says states 'never got any documentation about the proposal'

Annastacia Palaszczuk says states 'never got any documentation about the proposal' Sussan Ley, Julie Bishop defend proposal, lay blame on states for rejecting plan

The support comes after Opposition Leader Bill Shorten described Mr Turnbull as "arrogant" for thinking his proposal would ever gain support.

Mr Turnbull announced a plan to reduce the Commonwealth's rate of income tax to allow the states and territories to levy their own tax to fund health and education on Wednesday.

But he was unable to convince state and territory leaders it was the best way to fix their budgets, and the plan was scrapped.

Mr Shorten has labelled it a "humiliating farce".

"Wednesday he had an idea which was going to be the best reform ever to Federation, the crazy idea of double taxation, allowing state income taxes to be levied on working Australians, only to drop it temporarily by Friday," he said.

"Mr Turnbull wants to move on from the train wreck of this week, with his outlandish idea to have double taxation, but Australians won't let him move on so quickly.

"The Prime Minister who says that this idea of allowing states to introduce income taxes on working Australians as the most important reform of Federation cannot be trusted when he says, 'Well, I don't want to talk about that idea anymore for the time being'."

'We've learnt a great deal'

Mr Turnbull brushed off criticism that the rejection was a humiliation.

Rather, he said it cleared up future funding disagreements between the Commonwealth and states and territories.

"The proposal that we made was one that was either going to be acceptable to the states or not – either way, we've learnt a great deal," Mr Turnbull said.

"The clarity of our fiscal reality that is revealed by the states' refusal to contemplate taking more responsibility for raising revenues is very important, because they cannot credibly ask us to raise taxes they were not prepared to raise themselves when they were given the opportunity to do so.

"We're all agreed, we're not going to raise any more taxes in net terms, we'll try to make our tax systems more efficient, and states should do that and we will do that, but we have to live within our means."

Commonwealth 'wasn't very serious' about proposal

Western Australia Premier Colin Barnett was the only leader to voice his support for the plan.

Mr Shorten said those present at the COAG meeting were not the only ones who were opposed to the plan.

"The truth of the matter is that Australians weren't going to have a bar of it," he said.

"Only Mr Turnbull could be so arrogant to think he could justify putting new income taxes on Australian working people."

Queensland Premier Annastacia Palaszczuk led the charge in criticising the Prime Minister's handling of the proposal.

"The Commonwealth wasn't very serious about it, because we never got any documentation about the proposal," she told the ABC's 7.30 program.

"I am concerned that an idea of this magnitude was not handled better by the Prime Minister and his Cabinet."

Senior ministers suggested the blame lay with the states and territories for knocking back the plan. ( ABC: Matt Roberts )

States 'quick to ask Commonwealth to do their dirty work'

Health Minister Sussan Ley suggested the blame lay with the states and territories for knocking back the plan, and said they could not keep approaching the Commonwealth cap in hand for money.

"I'm disappointed in the premiers. They're quick to ask the Commonwealth to do their dirty work," she said.

Loading

Foreign Affairs Minister Julie Bishop defended Mr Turnbull's bold proposal, describing it as courageous and denying it had been an embarrassment.

"I'm pleased that the Prime Minister is pushing the states to be more accountable for the services that they provide," Ms Bishop said from Washington.

"He was giving them the opportunity to take greater responsibility over their revenues, take greater responsibility over the outcomes of their service delivery and it seems a number of states aren't prepared to take that responsibility; they'd rather leave it with the Commonwealth.

"Malcolm Turnbull has the courage to put forward big ideas and he would have expected a level of sensible dialogue, which he got from some quarters, but other states are just prepared to pass the buck to the Commonwealth.

"I think that, in time, the states will see some of these opportunities more positively and I hope that there will be a dialogue that will lead to an assumption by the states of greater responsibility for their actions and the services that they provide and their commitment to their taxpayers."