NSW and Victorian treasurers have formed a breakaway group, sidelining Treasurer Scott Morrison in a new national board that will exclude the federal treasurer.

The move, led by NSW Treasurer Dominic Perrottet has been born out of state treasurers' growing frustration at the "punitive approach" of the federal government and a sense that they were "being treated like serfs, not partners", according to Victorian Treasurer Tim Pallas.

NSW Treasurer Dominic Perrottet. Credit:Jessica Hromas

"There is naturally frustration amongst the states about issues in which we feel we require greater autonomy for the good of our communities and of the nation," Mr Perrottet said on Friday.



"It is an opportunity to play a more active and agenda-setting role in federal affairs, something I believe is currently lacking."

It is understood the move was only made possible by the NSW Coalition government taking the lead in establishing the new Board of Treasurers.