A far-reaching investigation into NSW health services will probe shortfalls in the multibillion-dollar system to help cut waste and make better use of staff and funding.

The special commission of inquiry was announced on Thursday by Health Minister Ryan Park, who described it as a "once in a generation" look at the troubled system.

The probe will look at employment and training for staff as the government works to address chronic shortages and a major union accuses state officials of overseeing a disappearing universal health system.

It will also examine expanding the roles of paramedics, nurses, midwives and community health services to help take pressure off hospitals.

Mr Park said the inquiry would mean better conditions for the roughly 170,000-person state health workforce.

"I've got a health system that needs to continue to get better and better and evolve every day," he said.

NSW Health Services Union secretary Gerard Hayes said universal healthcare in the state was disappearing because it was becoming unaffordable, but a wide-reaching probe would help work out how to restore it.

"When the people of NSW are paying a third of the state budget towards NSW Health, they have an entitlement to understand how that money's been spent and where it's being spent," he said.

But Australian Medical Association branch president Michael Bonning said the terms of the inquiry were too focused on cuts to hospital care.

"As a GP, I agree the health system needs to recognise the crisis in general practice," he said.

"However, the primary responsibility of the NSW government is to fund our public hospital services.

"Suggesting cuts to those services is dangerous and will harm patient care."

Dr Bonning noted similar inquiries in the past have done little to improve NSW's health system and in many cases the findings had been ignored by governments.

Opposition health spokesman Matt Kean called on the government not to undo additional health funding allocated by the former government.

"Ryan Park needs to commit to not cutting a single cent from the $33 billion health budget," he said.

Mr Park said the inquiry would not lead to funding being stripped from the health budget, which accounted for the largest single area of government spending.

Barrister Richard Beasley will head the inquiry after previously serving as senior counsel for a probe into the Ruby Princess COVID-19 outbreak, as well as commissioner for two local government inquiries.

The results will be delivered to the premier's office by August 24, 2024.

Also on Thursday, the government announced it will move to pause payroll tax audits for GPs and their practices for 12 months.

There will also be a 12-month pause on tax penalties and interest accrued on outstanding payroll tax debts.

Finance Minister Courtney Houssos said the move would reduce cost pressures facing GPs.