Budget 2014: State and territory leaders to meet in Sydney to discuss budget response (ABC)

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State and territory leaders will meet in Sydney today to discuss their concerns over planned cuts to health and education funding.

Most states have reacted angrily to the Federal Government's plan to rip $80 billion out of school and hospital funding over 10 years.

All premiers and chief ministers except Western Australia's Colin Barnett will convene to decide how they will fill the funding shortfall.

Queensland Premier Campbell Newman has come up with a radical plan for the states to push for a portion of income tax revenue to compensate for the cuts.

"We believe it's time to re-invent the federation and ensure [a] long-term funding stream if the states and territories are to take that responsibility," he said.

"What we are pushing for is that the income tax that is paid by mums and dads in this state comes back to the mums and dads of this state on a fair, ongoing basis."

Mr Newman has called the budget cuts "not fair" and "not acceptable", saying they are an attempt to "wedge" the states into pushing for an increase in the Goods and Services Tax (GST).

Labor's Gonski school funding plan will be dumped in 2017-18, saving about $30 billion from the federal budget.

Hospital funding agreements, agreed with the states and territories under former prime minister Kevin Rudd, will also be wound back from 2017, saving $50 billion over eight years.

On Wednesday, Mr Barnett said the effects of the cuts were still some time away.

"It's four to five years away so no sense of panic is required," he said.

Mr Barnett said he was "happy" to discuss an increase to the rate of the GST - with the caveat that his state must receive a greater slice of the tax take.

But South Australian Premier Jay Weatherill has called on his counterparts to band together in a campaign of resistance against the Federal Government.

"I think the key thing is to make sure that we remain united and that we have a very clear and simple message and that's for Tony Abbott to reverse these cuts," he said.

"The Senate is meant to be the states' house. We'll be calling on the states' house to actually play its traditional role in representing the interests of the states."

Prime Minister Tony Abbott has begun speaking to premiers and chief ministers about their concerns but he says ultimately, the states need to take more responsibility for health and education.

President of the Medical Association in Victoria, Tony Bartone, says the state's projected loss of $20 billion over 10 years will put increased pressure on the hospital system.

"We currently have the equivalent of an Etihad Stadium-sized crowd waiting for elective surgery in Victoria," he said.

"If we do not get the reversal of that funding cut back in some way, shape or form, we're only going to see that crowd grow larger."

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