In a new spirit of creative policy discussion, the Prime Minister left open the possibility of taking an increase in the GST to an election if it could be widely agreed, appearing to acknowledge for the first time that revenue is a problem for governments.

"My focus is on more efficiency," he said. "Other people's focus may well be on the revenue pressures, but I do want to say that all of us are in a fiscal bind at the moment, and we've got to look at all the options."

Mr Abbott - having previously referred to the claimed "wrecking ball" and "python squeeze" of the carbon tax, and claimed Australia was beset by a "debt and deficit disaster" under Labor - now wants civility and respect in national policy discussions, rather than "scare campaigns".

Despite a four-four split of Labor and Liberal first ministers at the Sydney leaders' retreat and subsequent Council of Australian Governments meeting, the leaders emerged full of enthusiasm for a number of far-reaching reform ideas that could see Medicare extended into public hospitals for the first time, the GST widened or increased to raise more health funds, the 2 per cent Medicare levy doubled to 4 per cent, and a federal takeover of state-run vocational training.

Leaders also committed to a new focus on early childhood education, and to putting teacher quality ahead of all other education priorities in the belief that it is the most effective single factor.

The radical ideas are among many canvassed at the two-day talks, with friends and foe alike lauding Mr Abbott's willingness to keep all options on the table.

Mr Abbott, who has been dubbed "Captain Combat" for his uncompromising political style, said while he remained committed to ensuring taxes were "lower, simpler, and fairer", he was not "in-principle" opposed to changes in the taxation mix.

"We want to have a well-informed and civil national conversation about all these things and, frankly, if we can have a conversation rather than a scare campaign, our country will be so much better off," he said.

He said the country faced a set of challenges which could only be progressed with widespread agreement that avoided reforms being undone for political gain.

"We need to have something approaching a consensus because change ought to be durable ... but it won't be durable unless there's something like a consensus, and to achieve something like a consensus on things that can easily be initially quite contentious is going to require a decent conversation with the Australian public, and I think we're up for it," he said.

A plan by New South Wales Premier Mike Baird to lift the GST to 15 per cent - with accompanying compensation for the least well-off - and an approach to double the Medicare levy by Victorian Labor Premier Daniel Andrews and Queensland's Annastacia Palaszczuk, were both sent off for further study.

However, one key group remained well offside. Federal shadow treasurer Chris Bowen strongly criticised the prospect of a bigger GST take.

"You promised on 33 separate occasions before the last election not to change the GST," Mr Bowen said in public comments directed at the Prime Minister.

"Today you confirmed that you will continue your attack on low and middle-income earners by directly adding to their cost of living. Add that to a long list of betrayals of the Australian people."

The COAG meeting also agreed to an in-principle plan to allow the Northern Territory to become a state, setting the goal of achieving that status by January 1, 2018.

The Top End's Chief Minister, Adam Giles, thanked other leaders who backed the goal unanimously, which would leave just the ACT as a territory in its role as the seat of national government.

So strong was the mood for consensus that the Mr Abbott, a notoriously conservative monarchist, conceded that NT statehood might require a change to the flag.

South Australian Premier Jay Weatherill said the meeting was the most productive and significant such gathering in his 13 years in politics.

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