FEDERAL Treasurer Wayne Swan has accused NSW Premier Barry O'Farrell of attempting to cover up his own budget cuts after he called on the commonwealth to commit to billions of dollars worth of partnerships funding.
NSW stands to lose $2.4 billion over four years if the funding isn't continued under new agreements which reward states for meeting reform targets in areas such as health, education, child care and the homeless.
Mr O'Farrell on Wednesday called on Canberra to outline the future of the agreements, some of which are due to expire next June.
He said the NSW government had already tightened its belt because of a $5.2 billion drop in GST revenues - slashing funding to health and education - and predicted "further pain" if the state lost billions more in partnerships funding.
"If the federal government don't commit to a continuation of national partnership funding, another two-and-a-half billion dollars will be cut from the state's revenues," Mr O'Farrell said.
"That means further belt tightening. That means further savings measures across NSW.
"That's a huge blow to people who use the health system, it is a huge blow to the children who are in education or child care, it is a huge blow to indigenous communities in relation to those who suffer disadvantage across the state.
"It will hurt those who sleep rough on our streets, as well as those seeking accommodation under domestic violence programs."
But Federal Treasurer Wayne Swan accused the premier of a "desperate smokescreen" to cover the state's own budget cuts.
"(Mr O'Farrell) has called on the federal government to guarantee hospital funding - and we have done exactly that, in an agreement that he has personally signed," Mr Swan said in a statement to AAP.
"In fact, under the National Health Reform Package, we are boosting funding by more than $16 billion over six years."
Mr Swan said Labor had boosted funding for states under national specific-purpose payments and national partnership agreements by around $7 billion since the Liberals' time in federal government.
The issue of the funding agreements has been raised at the three Council of Australian Governments (COAG) meetings Mr O'Farrell has attended since becoming premier in March 2011.
However, the federal government has so far refused to commit to renewing the agreements introduced by former prime minister Kevin Rudd.
"At each meeting national partnerships have been discussed," Mr O'Farrell told reporters in Sydney.
"At each meeting there has been no resolution, no agreement from the commonwealth government as to what's happening with the future of national partnerships.
"What that does is leave every state, but particularly NSW, in a situation where we don't know what money we're going to have from the first of July next year."
Mr O'Farrell said it was time Prime Minister Julia Gillard explained to state and territory leaders what was going to happen "because we can't allow this uncertainty to continue".
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