PRIME Minister Tony Abbott has left the door open for the states to raise the GST after leaving them with huge holes in their school and health funding.
Mr Abbott told the ABC this morning that it was up to 'grown up governments' to find ways to fund their own areas of responsibilities.
He would not be drawn on whether he would support a GST increase, saying that was a matter for the states, even though the Commonwealth collects it.
Mr Abbott said that would be discussed as part of white papers on taxation and federation.
The comments are expected to inflame tensions between the states and commonwealth.
Queensland Treasurer Tim Nicholls said it was 'deeply disappointing to see that the Commonwealth has revised the funding methods for health and education''.
"The revisions are nothing more than an unjustified attack on the state's delivery of health and education services," he said.
"We will use the time between now and the implementation of these measures to take the fight to Canberra.
"These changes will significantly increase the pressure on the state's budget, as we believe the shifting of expenditure to the state's Budget is unsustainable.
"Of particular concern is the freezing of indexation payments to local governments.
"The state is not in a position to assist, given our own budget repair task, so this reduction in funding is going to increase the strain on local governments."
Mr Nicholls said there were clearly many difficult decisions the Federal Treasurer has had to make in his first budget which will impact on Queenslanders.
"Two years ago the Queensland Government started the process that Joe Hockey has begun," he said.
"The Queensland State Budget will not require the same sorts of measures announced in the Federal Budget because the government made strong choices in our first budget with fiscal repair measures totalling $7.5 billion."
Queensland welcomes road funding
THE Queensland Government has welcomed confirmation from the Federal Government that it will meet its responsibility to fund key transport projects.
Deputy Premier Jeff Seeney said on Wednesday Queensland was a big winner when it came to infrastructure.
"The federal road funding announcements are the culmination of a long battle waged by Queensland's LNP going back to our days in Opposition," he said.
"The proper funding of critical roads like the Bruce Highway, Gateway North, the Toowoomba Second Range Crossing, and the Warrego Highway would never have happened if Labor was in government in Queensland.
"We promised to deliver better infrastructure and planning and last night's federal budget confirms that we are doing just that by effectively advocating for Queenslanders."
Major Queensland projects that had funding confirmed in last night's Federal budget included:
$6.7 billion for the Bruce Highway
$1 billion for the Gateway Upgrade North
$1.3 billion for the Toowoomba Second Range Crossing
$508 million for the Warrego Highway.
Sunshine Coast MP Mal Brough said the government would spend $1 billion on Bruce Highway over coming years to ease congestion on the Brisbane to Sunshine Coast run.
It would start with funding of $147 million from July 1.
Update your news preferences and get the latest news delivered to your inbox.