State governments not involved in the big infrastructure spend for northern Australia are in revolt against what they see as an unfair deal.

While this week’s budget brought a boost for drought-affected and disadvantaged regions, New South Wales and Victoria have primarily seen cuts.

NSW Treasurer Gladys Berejiklian said has conceded the fact that the Commonwealth will slash billions from state schools and hospitals.

But she has welcomed the general tax relief for small businesses and the Federal Government’s continued keenness for major infrastructure projects.

Opposition Leader Luke Foley said the pain was worse than Ms Berejiklian was letting on.

“[The] cuts to our health and education system foreshadowed in last year's budget are now built into this budget - built into the forward estimates, it will lead to fewer hospital beds, longer waiting times for elective surgery,” Foley said.

The Opposition Leader said NSW Premier Mike Baird needed to stand up to the Prime Minister.

“Mr Baird said in his campaign that he would seek to persuade Tony Abbott to reverse those cuts,” he said.

“Last night's budget we see confirmation of those cuts - $25 billion that would wreak havoc to our hospital system and our school system in this state.”

Meanwhile, Victoria’s Labor government says it will lose $17.7 billion as a result of the Abbott Government's second federal budget.

Victorian Health Minister Jill Hennessy said savage cuts had been snuck in.

“There is a reason that Joe Hockey barely mentioned health in last night's budget speech, and when we open the budget papers we find out why. It's because they've made vicious and significant cuts,” Ms Hennessey said.

“We've got one year, and then federal health funding effectively falls off a cliff.”

The Federal Government has introduced a new hospital funding formula.

It moves from a system based on demand and costs to one linked to inflation and population growth, leading some to suggest poorer and less populous regions will be left behind.

The Commonwealth is cutting the National Partnership Agreement on Preventive Health as well, removing money for programs to encourage healthier lifestyles.

The Victorian government said the funding cuts would hit Koori maternity health and Indigenous sexual health programs, and leave a $181 million shortfall for Victorian public dental service funding.