Treasurer Joe Hockey and Prime Minister Tony Abbott have put the onus firmly on the state governments that run hospitals and schools to publicly mount the case for changes to the GST to make up for a looming funding shortfall, which will see $5 billion less spent on schools and $15 billion less spent on hospitals by 2024-25 under changes to indexation arrangements.

Mr Hockey said that as states are the sole recipients of the GST, they would "have to run the argument".

"They want to increase funding in their areas of responsibility, then they’ve got to run the argument on the GST."

"The states don’t want to be associated with the pain of raising taxes to pay for the increased expenditure in their areas of responsibility."

"We went to the last election promising that we would not change the GST. We are honouring that commitment. We also said we would have a review of the entire tax system. We are honouring that commitment. Any changes we would take, we would obviously take to the next election,'' he told the traditional post-budget National Press Club lunch.

The funding changes have sparked outrage among the states, led by Queensland Premier Campbell Newman, who said on Wednesday the federal funding cut was unacceptable and should have been flagged at a meeting of the Council of Australian Governments in Canberra about two weeks ago.

Mr Newman said he had spoken to state colleagues including Mr Baird, Victorian Premier Denis Napthine, South Australian Premier Jay Weatherill and Northern Territory Chief Minister Adam Giles and wanted an emergency COAG meeting to be held.

"We want to get together first to confer on these matter. We're calling on the PM to hold an urgent or emergency COAG meeting,'' he said.

"This whole thing seems like a wedge to get the states to ask for the GST to be raised ... we're prepared to take responsibility, full responsibility, for health and education, but we need proper secure revenue streams so that our populations, states and territories, can actually get the services they deserve."

Mr Baird, who has previously advocated reform of the GST, predicted on Wednesday the cuts to health and education would bring forward debate about a potential rise in the GST to secure extra revenue for the states. He supported calls for an emergency COAG meeting.

Asked if he believed Mr Hockey was seeking to "wedge" the states on the issue of an increase to the GST by requiring them to find a way to fund extra health and education services, Mr Baird said he remained a supporter of Mr Abbott's pre-election promise to have a "mature debate about tax reform".

"That should take place," Mr Baird said. "What we saw with events last night, that has brought that forward."

Dr Napthine backed Mr Newman's call for an emergency COAG meeting but with a state election looming later this year, the Victorian Premier said his state had "no intention of arguing for an increase in the GST".

"I don't see any need to increase [the GST] ... but what Victoria wants is a fairer share,'' he said.

"Victoria is seemingly being penalised for being good managers of the economy."

Victoria held significant concerns over the looming funding cuts, he said, but his state would keep its promise to put in place additional school funding agreed under the Better Schools plan with the former Labor government.

WA Premier Colin Barnett played down the need for an emergency meeting but left open the possibility of supporting a rise in GST or broadening its base - so long as his state received a fairer share of the revenue distributed.

"If I was to support an increase in the rate of the GST, as West Australian Premier, what I'd be doing is saying to West Australians, 'Pay more in GST so more money can go to the other states,' so I'm never going to support that. Any change to the rate or the coverage of the GST in terms of exemptions will only change if there is also a change to the distribution,'' he said.

Mr Barnett said he was willing for his state to contribute up to 25 per cent of its GST take to other states, but "but we're not willing to contribute 65 per cent of our GST".

West Australians will only receive back about 37 cents for each dollar of GST revenue paid to the Commonwealth in the 2014-15 budget because of a transfer system called horizontal fiscal equalisation that ensures services such as health and education are roughly equivalenet in all states and territories.

Victorians will also lose out, receiving 88 cents for each dollar paid, while people in NSW will receive 97 cents in the dollar. All other states receive more money in GST distribution then they pay. Any change to the GST requires the agreement of all states and territories.

Shadow treasurer Chris Bowen said on Wednesday the funding cuts would force the premiers to begin the potentially politically toxic argument to raise the GST to make up the shortfall.

Mr Bowen told ABC Radio that “as sure as night follows day, premiers will say ‘to make up from this cut, we will need to increase the GST”.

“Mr Abbott and Mr Hockey have set it for this express purpose,” he said, adding that Labor's position was clear in opposing a rise in the GST or broadening its base.

with Sean Nicholls, Jessica Wright

Follow us on Twitter