Make GST 11pc to fund hospitals: Keating

Former prime minister Paul Keating is pushing the case for a one per cent rise in the GST so long as it's used to help fund public hospitals.

Mr Keating - who has dismissed a 15 per cent GST as "fiscal folly" - believes an increase to 11 per cent will raise the $7 billion NSW Premier Mike Baird says is needed to meet rising healthcare costs.

"If in fact it was hypothecated, as the phrase goes, so that the money can only be spent on health, well at least then members of the public would feel perhaps not so bad about it," he told Alan Jones on 2GB radio on Thursday.

States would have to ensure they wouldn't spend it on another stadium or "road to somewhere", he said.

"Premiers have got problems, I know that, but when state premiers are making the commonwealth policy for the budget you've got to start wondering where the debate is going."

Mr Keating first raised the idea of a modest increase for hospitals in an opinion piece on Wednesday, but Opposition Leader Bill Shorten rejected the proposal.

"We will not support an increase in the GST. Labor will stick to its guns," he said.