Retreat to tackle nation's problems

Whether it ends up with gloves off or a group hug, a meeting of the nation's leaders has the chance to change the shape of the federation.

While much of the discussion heading into gathering of premiers and chief ministers at Prime Minister Tony Abbott's leaders retreat in Sydney on Wednesday has centred on the GST, there is a lot more at stake.

Mr Abbott scheduled the meeting after a gathering of the Council of Australian Governments in April proved a terse affair between Western Australian Premier Colin Barnett and everyone else over how GST revenue is carved-up.

It also comes after premiers were angered by federal Treasurer Joe Hockey cutting $80 billion out of future state funding from schools and hospitals in his first budget - a move aimed at shifting responsibility away from the commonwealth.

This time around there will be no officials joining the leaders to stymie frank discussion.

Helpfully, none of the leaders has an election to worry about in the immediate future.

South Australian Premier Jay Weatherill, a long-time attendee of COAG, says there are lots of big challenges facing the nation and each of its jurisdictions.

But he feels an air of "excitement" in trying to tackle them.

"It's an ideal environment to make some big decisions," he says.

Business and community groups have called for all options to be kept on the table for the tax and federation reform discussion and a level of bipartisanship that has "not seen for a long time".

The premiers agree that politics should be left at the door and that the retreat should not be used to score points.

"I think quite frankly, the state and the country are sick of it," NSW Premier Mike Baird says.

Mr Baird stirred the pot ahead of the meeting by proposing a hike in the GST rate to 15 per cent from 10 per cent as a way of funding a projected shortfall in future health funding.

While not all premiers agree with the idea, it has opened up discussion and drawn out other ways to raise funding.

Victorian Premier Daniel Andrews, for example, is totally against touching the GST, but believes raising the Medicare levy as a way of funding a black hole in the health system.

But Mr Weatherill says revenue is only part of the agenda.

The meeting will also look at how hospitals are run, in particular in terms of chronic disease, childhood education and housing reform.

More formal discussion will take place on Thursday with a full-blown COAG meeting.