A new federalism, in which the states would be reduced to branch offices, has been flagged by the Treasurer, Peter Costello, as a credential for his prime ministerial ambitions.
Asked yesterday what he would bring to the top job, Mr Costello said: "I think federalism has to be completely recast."
This would probably include abolition of state taxes.
States could take more responsibility for decisions and finances, or move, "as I believe we will, to a national framework, with states increasingly becoming service deliverers, working more as partners to federal or national objectives", Mr Costello said on ABC radio.
Mr Costello acknowledges states will remain but the breadth of his plan would require effectively a new constitution, not a mere tinkering.
His sensitivity to criticism of his leadership preparedness was highlighted yesterday when he told Channel Nine that any suggestion he was uninterested in the affairs of Sydney or Brisbane was "patently not true".
"My duty is to every single person in this country and that is what I take seriously," Mr Costello said. He was responding to the Liberal MP Jackie Kelly, who doubted aloud whether a Costello government would value her western Sydney constituents in the way the Prime Minister, John Howard, did.
The Victorian Treasurer, John Brumby, said Mr Costello's call for an overhaul of federalism was at odds with the co-operative approach to national reform agreed to by Mr Howard and the states.
"Mr Costello's comments are more about attention-seeking rather than serious policy reform," he said.
The states had failed the responsibility test of the $37 billion annual GST revenue "free kick", Mr Costello told Channel Nine.
They took the money but continued the rhetoric of blaming the Commonwealth and asking for federal help in every area. The Commonwealth was "now
bedevilled by the problem of federalism". Instead of growth revenue making the states more independent, "it looks to me as if the movement is now going to be in the other direction".
Mr Costello was less than precise, however, on how his branch office model would work.
His office said he would not elaborate, for instance, on how the key areas of health and education would play out.
It also refused to say whether Costello's new federalism was the subject of tightly defined policy research or - as Labor put it - "a classic Liberal thought bubble".
Mr Costello nominated ports as obvious targets for Commonwealth control, adding: "I would like the Commonwealth to take full responsibility for the national economy in relation to tax, in relation to interest rates, in relation to growth, in relation to jobs, in relation to industrial relations".
Centralisation has been the trend of Australian government for most of Federation but Mr Costello envisages a seismic shift.
Recently, the Commonwealth seized industrial relations powers - using its constitutionally broad corporations power - but the Health Minister, Tony Abbott, got nowhere with colleagues when he advocated a federal takeover of public hospitals.
The NSW Treasurer, Michael Costa, welcomed Mr Costello's "belated recognition" of problems with service delivery and taxation in the federal system but called for further discussion.
"The current arrangements mean the states are too dependent on federal grants to be able to adequately fund the rates of growth needed in essential frontline services for our ageing population," Mr Costa said.
The Opposition Leader, Kim Beazley, said Mr Costello's remarks were part of a Coalition preoccupation with the niceties of federal-state relations.
Of the call for federal control of ports, he said: "What they should be doing is going out there and offering leadership to get a better export performance."