Chief Minister Andrew Barr has welcomed a possible backdown on federal budget cuts to health, suggesting Malcolm Turnbull is trying to "neutralise" unpopular Tony Abbott-era policies in an election year.
Friday's Council of Australian Governments meeting with Mr Turnbull and state leaders could see a deal reversing some cuts from the unpopular 2014 federal budget, worth up to $80 billion in national partnership agreements.
States and territories could be offered a four-year deal for hospital funding, worth about $5 billion. Some state leaders expect they will be offered an agreement to 2020, based on the original formula agreed with the former Labor government in 2011.
Media reports suggested the deal was not yet finalised but had been discussed by Mr Turnbull and Treasurer Scott Morrison over the Easter weekend. It could be tied to a plan for states and territories to receive a share of income tax revenue, as proposed by South Australian Premier Jay Weatherill.
State leaders have consistently called for the cuts to be reversed.
Mr Weatherill said he'd received a preliminary call from Mr Turnbull and expected an interim deal would be reached. He described the plan as a $5 billion solution for a $57 billion problem.
On Tuesday, Mr Barr said the $80 billion shortfall in health and education funding remains "the biggest threat to every state and territory budget".
"As I have said before, the Liberals have ripped millions of dollars out of Canberra's hospitals and the Liberals have stolen millions from our school children," he said.
"All states and territories agree this is a devastating blow. Clearly Malcolm Turnbull wants to neutralise this issue in an election year, and I welcome his willingness to discuss it, but the message is clear: give our schools and hospitals back their money."
Mr Barr said territory officials would be briefed on the details of the proposal this week and he looked forward to further discussions at the meeting at Parliament House on Friday.
Mr Barr has previously warned that allowing states and territories more autonomy on tax affairs could see federal public service job cuts in Canberra. States have not taken a share of income tax revenue in Australia since World War II.
In December, he said the attraction to changing the tax mix came from the fact that GST revenue streams were not growing as fast as health and education spending, while income tax revenue was growing at an adequate rate.
Mr Turnbull will host premiers and chief ministers for dinner at The Lodge on Thursday night.
He said the proposal to maintain activity-based funding and efficient pricing would be discussed, but would not confirm any dollar figure.
"(We'll) ensure that Australians get the best care in hospitals and that hospitals are delivering that care to Australian patients as efficiently and effectively as we can," Mr Turnbull said.
On Monday, ACT Women and Housing Minister Yvette Berry called for better co-operation from the Turnbull government on addressing housing and domestic violence services.
Ms Berry said she was concerned the federal government could refuse to fund a renewed national agreement on homelessness services after June next year. COAG is expected to discuss the issue at a future meeting.
Sign up for our newsletter to stay up to date.