Health Minister Nicola Roxon threatens new Liberal premier in Victoria over $4bn health funding

Nicola Roxon has threatened to withdraw funding from Victoria if Ted Baillieu refuses to honour the reform agreement signed by his predecessor.

Nicola Roxon has threatened to withdraw funding from Victoria if Ted Baillieu refuses to honour the reform agreement signed by his predecessor.

The threat came as the Health Minister conceded there was no legal obligation on Mr Baillieu to honour the agreement.

Mr Baillieu has jeopardised the Gillard government's health reforms by reserving the right to renegotiate the deal, which commits his government to handing back 26 per cent of its GST to the commonwealth.

Western Australia has refused to sign up to the deal and the NSW opposition, which could come to power next March, says it reserves the right to pull out of the health agreement.

None of the states or territories has signed a separate deal to hand over a portion of GST funding to the commonwealth to help pay for the $50bn in health reforms.

Constitutional law expert George Williams says no Council of Australian Governments deal has ever been legally binding on the states or the commonwealth.

"The High Court has said these agreements are political, not ones the court can enforce," he told The Australian.

A provision of the health agreement states: "The parties do not intend any of the provisions of this agreement to be legally enforceable."

Health Minister Nicola Roxon conceded the point, saying "as with all COAG agreements ever struck, there's no legal compulsion for states to stay committed".

She warned Mr Baillieu "if Victoria changed its mind it would miss out on the extra investment that comes with reform".

Victoria is in line for $822 million of commonwealth funds to improve its hospitals. The commonwealth has also pledged to invest an additional $3.8bn for the growth in Victorian hospital services over the next decade.

Julia Gillard said she expected Mr Baillieu to honour the health agreement.

"Victoria has signed the health deal," the Prime Minister said on Melbourne radio. "I do expect states to honour the commitments that they have made, but beyond honouring a signature on a document, there are great reasons for Victoria to be in this health deal and stay in this health deal: reasons like 444 more hospital beds; reasons like almost $4bn new in growth fund for health."

Mr Baillieu said preliminary briefings he had received on the details of the health agreement "suggests the approach I have been articulating to you is not an unreasonable approach".

"The problem with the health deal is that we really don't know the ultimate content of it," Mr Baillieu said.

"We know little about consequences for country hospitals, or specialist hospitals. We know little about the dividing line between hospitals and Medicare.

"Until we have a handle on that, and until we have a detailed briefing, I'm not going to say it's a great thing. I'm simply reserving the right to seek to renegotiate it."