State governments shape up for fight with Canberra

STATE governments are shaping for a major fight with Canberra over the Abbott government's first budget, which brought down a whopping $80 billion cut to schools and hospital funding.

As Treasurer Joe Hockey defended his first budget on Wednesday, he said that states would benefit from the $11 billion infrastructure package promised on Tuesday night.

But he also said that "adult governments" should be prepared to pay for the services they provide, confirming the government's intention of leaving state governments with the bill for the health and school sector.

Among the raft of cuts unveiled on Tuesday night was a total $80 billion cut across a range of national agreements on education and hospitals funding, including ending the previous government's Gonski reforms in 2016.

Those cuts angered New South Wales Premier Mike Baird, who led the charge on Wednesday, labelling the move "cost-shifting" by Canberra in order to help its own bottom line.

"When we came to power, we got our house in order, we didn't send the bill to Canberra," he said.

"What we're surprised about is that they are shifting the problem on to the states.

"We're saying to Commonwealth - you cannot make announcements like last night and not involve the states - but we're not going to be forced into anything."

Mr Baird's comments were echoed by South Australian Premier Jay Weatherill, Queensland Premier Campbell Newman and Victorian Treasurer Michael O'Brien.

All three states have confirmed they are seeking an urgent meeting to discuss the cuts with the Abbott government, with Mr Baird also preparing to release his first budget as Premier in just five weeks.

The revolt by the most populous states in the country against the Abbott government's budget also comes as the Commonwealth moved to cut local council funding too.

Cuts in the budget to the growth of local government financial assistance grants, totalling just less than $1 billion over four years, were also unveiled on Tuesday night.

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