A deal has been done for an historic nationwide overhaul of Australia’s health system.

Prime Minister Kevin Rudd said this afternoon the commonwealth would retain a third of GST from the states and territories and direct it to the health system, funding 60 per cent of building, equipment, teaching and services in 762 public hospitals.

The Commonwealth would also fund all GP, primary care and aged care services, he said.

‘‘This, ladies and gentlemen, is a very, very big reform of the health and hospital system of Australia,’’ Mr Rudd said.

Victorian Premier John Brumby, who initially had been a strong opponent of the reforms, said the big achievement of the agreement was that there was “more money now’’.

‘‘All of us … have argued that what we needed across Australia was more money now,’’ he said.

‘‘Not a commitment to more money in 2013-14 or beyond.’’

But WA Premier Colin Barnett said he would not be signing on to the deal as it stood.

Mr Barnett said he supported many of the measures, including those around elective surgery and extra beds, but the sticking point remained the plans for a federal clawback of GST.

He also supported governance arrangements.

‘‘But the third aspect of the commonwealth essentially taking one third of the total GST pool is not acceptable to me and it is not acceptable to Western Australia.’’

Mr Barnett said WA was still prepared to sign the agreement, as long as the Commonwealth compromised on the GST clawback.

WA wants to hang on to its GST revenue, but is prepared to pay an equivalent amount of money into a special health fund.

‘‘So, in other words, the outcome would be exactly the same, but we would not agree to the Commonwealth taking, in a pre-emptive way, one third of our GST,’’ he said.

The states and commonwealth spent two days of frantic negotiations before agreeing to the hospitals funding plan.

The deal was brokered by allowing the states to direct GST revenue into a state-controlled funding pool that will then operate local hospital networks.

– with AAP