After 3 years of cuts and austerity budgets from our State Government a further $80billion shortfall is now being forced onto States by federal budget cuts.  This will have a cascading affect across all our state delivered services.  Our National Health Reform Agreements include funding guarantees which were designed to increase the Commonwealth's contribution to hospital funding but the federal budget removed those guarantees from July 1.  The Abbott Government also announced in the budget that from July 1, 2017, it will remove the current indexation arrangements for hospital funding and will only increase it by the rate of inflation, as measured by CPI.  The current indexation of hospitals is over 6 per cent, while the budget overview forecasts CPI to increase by 2.25 per cent this year.  A similar situation arises with Education spending.  The plan was to increase federal funding to schools each year by 4.7 per cent (for schools that previously received less per student than the Schooling Resource Standard level) and 3 per cent (for schools that were already beyond the SRS), until the SRS target was met.  The Government announced in the budget that from 2018, instead of these percentages, Commonwealth school funding will increase at the rate of inflation, as reflected by the CPI, with an allowance for increased enrolments.  States will bear the shortfall.  Premiers met only a few weeks prior with the Prime Minister at COAG to discuss what Mr Abbott refers to as ‘new federalism’.   COAG discussed budgets and taxation, funding for various program including health and education.   COAG even issued a Communique outlining the matters they agreed to work on over the next few years including developing terms of reference for white papers on ‘Reform of Federation’ and on ‘Taxation Reform’ and agreed to discuss school funding at its next meeting.  The federal budget indicates now that Canberra has chosen competitive over cooperative federalism and is re-writing the financial relationship with the States and withdrawing from funding Health and Education service delivery to justify an increase in the GST.