Treasurer Joe Hockey has achieved a handshake agreement with the states that would see Canberra offer new incentive payments for the productive "recycling" of public assets.

After a meeting with his state counterparts in Canberra on Friday, Hockey said the Abbott government would provide a payment worth 15% of the asset if the state agreed to sell it off and invest the funds in new "productive infrastructure".

The incentive payment covers transactions agreed by June 2016 between Canberra and the state in question. The incentive payments would be available for five years, through to June 2019. The total dollar amount Hockey has allocated to the pool will be revealed in the May budget.

"The commonwealth’s incentive will be 15% of the assessed value of the proposed asset being sold for capital recycling," Hockey said on Friday.

"If proceeds are used by the states and territories for the retirement of debt or other purposes, rather than for agreed, new productive infrastructure, they will not be eligible to receive payments under the initiative."

Hockey said the states would need to demonstrate their proposed reinvestment provided economic benefits before Canberra would agree to hand over the cash. "This is a blank sheet of paper for a project proposal, but obviously there needs to be a net benefit to the economy, it needs to be result in more jobs and it needs to be a good use of money," he said.

He said the funds would need to be allocated over a five-year period “because obviously the scale of the asset sales will be potentially very substantial”.

"We need to fill an infrastructure hole in the economy and we need to do it fast," Hockey said. The incentive payments would have no impact on the carve-up of GST.

The shadow infrastructure minister, Anthony Albanese, responded to the news by arguing the Abbott government was walking both sides of the street on infrastructure: talking up its agenda but wanting others to do "the heavy lifting".

"At the same time as [Joe Hockey is] saying we need to invest more in productive infrastructure, he’s planning to rip billions of dollars out of public transport projects that have been fully funded in previous Labor government budgets," Albanese said.

Friday's meeting also continued discussions around a long-running push by the states to apply the GST to more online purchases from overseas, and canvassed the always controversial carve-up of GST revenues. Hockey said there had been unsurprising "grizzling" about the GST carve-up, but the meeting had been otherwise productive.