Former prime minister Paul Keating is pushing the case for a one per cent rise in the GST so long as it’s used to help fund public hospitals.

Mr Keating — who has dismissed a 15 per cent GST as “fiscal folly” — believes an increase to 11 per cent will raise the $7 billion NSW Premier Mike Baird says is needed to meet rising healthcare costs.

“If in fact it was hypothecated, as the phrase goes, so that the money can only be spent on health, well at least then members of the public would feel perhaps not so bad about it,” he told Alan Jones on 2GB radio on Thursday.

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States would have to ensure they wouldn’t spend it on another stadium or “road to somewhere”, he said.

“Premiers have got problems, I know that, but when state premiers are making the commonwealth policy for the budget you’ve got to start wondering where the debate is going.”

Mr Keating first raised the idea of a modest increase for hospitals in an opinion piece on Wednesday, but Opposition Leader Bill Shorten rejected the proposal.

“We will not support an increase in the GST. Labor will stick to its guns,” he said.

Both sides cherry-pick Keating’s ideas

Keating proposed the tax in 1985, then opposed it, now suggests raising it a little. Photo: AAP

Paul Keating can still cast a shadow over the parliamentary chamber he once dominated as prime minister and treasurer.

Keating on Wednesday shared, as he does every now and then, his thoughts on taxing and spending, closely connected matters that are also greatly exercising the minds and tongues of our current political leaders from both sides.

And being a generous bloke, his opinion piece in Wednesday’s Fairfax media provided something for everyone.

Both sides, naturally, cherry-picked with shameless abandon.

Assistant Treasurer Kelly O’Dwyer started by telling the National Press Club she couldn’t disagree with Keating’s view that Australia had to trim spending rather than raise more taxes.

Scott Morrison continued the theme in question time.

He agreed with the old scourge of Liberal MPs that higher taxes and higher spending was not a plan for jobs and growth.

Keating was also right, the Treasurer continued, in saying that policy should make the private sector larger and not restrain it with a burgeoning public sector.

Quick as a flash, Chris Bowen reclaimed Keating for Labor.

He also said, Bowen told Morrison, that the GST was just a “flat, bang you over the head tax”.

It changed nothing, except put the tax weight on the wrong people.

Morrison was unabashed, reminding Labor that Keating had supported a consumption tax “all those years ago”.

In 1985 to be precise. More than 30 years ago, at a tax summit.

Keating has long since recanted, but his proposal back then was the start of a seemingly endless debate about a tax on nearly everything.