Mr Abbott also appeared to temper his previous comments that there would be no changes to the GST without the support of every state and territory and the federal Opposition, saying he would persist with having a discussion.

"Any changes to the GST would be changes that happen on a national basis," he said.

Mr Baird fired the opening salvo ahead of a special two-day summit beginning in Sydney on Wednesday between Mr Abbott and the state and territory leaders.

The summit was been called to try and find a long-term funding model for public hospitals and schools. These were thrown into turmoil at the 2014 federal budget when the the Commonwealth cut $80 billion in funding over a decade with the edict that the states should find the revenue themselves, given they administer the services.

Australia’s consumption tax rate is among the lowest in the world.

Last week, federal Treasurer Joe Hockey called raising the rate or base of the GST the lazy option and declared "game over" on any further discussion after Victoria re-emphasised its opposition to any change to the rate or base.

"If the beneficiary of the reform doesn't want it, it's effectively game over," he said.

Mr Hockey said even if there were a consensus, there was no capacity for the federal budget to compensate low and middle income earners for a GST increase, as would be required.


But on Monday, as the Victorian government and federal Labor restated their opposition to any GST increase, Mr Baird and Mr Abbott breathed new life into the idea.

Mr Baird said there would have to be compensation for households earning under $100,000.

He anticipated a conversation over weeks and months ahead.

"I'm just putting forward a proposal to start forward a proposal to start this discussion."

Mr Weatherill told ABC radio Mr Baird had raised an important point and the funding shortfall had to be dealt with.

"What I've always said is that GST is an unfair tax, it places the highest burden on the lowest income earners," he said.

"If we can find a way of grappling with that, I'm open to this discussion."

In an earlier video message, Mr Baird said the budget shortfalls faced by all states could not be made up through efficiencies, and further revenue would be needed.


He said NSW government modelling revealed annual budget deficits across the Commonwealth and states are expected to total $45 billion by 2030, $35 billion of which relates to health spending.

"We face big problems, in this state and across the country and at the moment the biggest challenge we face is in our health system.

"We need revenue, I know it's not popular, but the best way of dealing with it that I see is to increase the GST ... and put all the dollars raised into health," he said.

Mr Baird says he will not support a broadening of the base and fresh food, education and childcare should still be quarantined.