NSW Premier Dominic Perrottet wants an overhaul of how education is funded between states and the federal government, describing the current system as a "dog's breakfast".
He has also called for state and federal relations to move "out of the realm of combat" and for buck passing over healthcare costs to stop.
Mr Perrottet argues the way responsibility for education is shared between the states and Commonwealth "makes absolutely no sense at all".
"The Commonwealth funds childcare. The states regulate it. The states fund early childhood education in community and mobile preschools but, if it's in long day care, it's mostly funded by the Commonwealth," he told the National Press Club on Wednesday.
"This is a complete dog's breakfast and no wonder no one can understand it. It's confusing for parents, it limits the levers that we can pull around affordability."
He proposed NSW take on full responsibility for childcare and early childhood education.
In return, the Commonwealth could take full responsibility for things like the National Disability Insurance Scheme.
"The point here is to allocate services to government in a way that actually makes sense. Having responsibility for education end-to-end makes sense, so let's do it," Mr Perrottet said.
He also wanted an end the "fractured system where governments are constantly passing the buck" over healthcare.
"States are responsible for public hospital services. The Commonwealth is responsible for primary and private healthcare. The problem is, sometimes these two systems are not in harmony, they're at cross purposes. And at other times, they're completely disconnected," he said.
Mr Perrottet suggested extending GP hours to take pressure off emergency departments and making telehealth a permanent feature of the system.
"These kind of changes are worthy of much discussion but, because the funding is convoluted, we just end up at a state level and a Commonwealth level arguing about dollars and cents," he said.
The premier urged the federal government to move past a "divide and conquer" strategy with states, pointing to the Board of Treasurers as a success story.
"(It) actually improved the working relationship between the NSW treasury and the Commonwealth treasury, because there is now an expectation that serious, considered ideas are being put forward," he said.
"A reinvigorated premiers' council can have the same effect. It will bring a strong, united position and ensure an influential seat at the table for states and territories at the national cabinet.
"We can move state and federal relations out of the realm of combat and into the realm of constructive cooperation."
The Business Council of Australia backed Mr Perrottet's call to reform to the way the federation runs following nearly two years of rolling border closures.
"Recapturing our thirst for reform will be critical to delivering a modern economy with new industries and higher paid jobs," chief executive Jennifer Westacott said.
Australian Associated Press