Western Australia's budget deficit has blown out by $265 million to $2.6 billion only three months since the budget was handed down, Treasurer Ben Wyatt has revealed in the mid-year review.
However he insists the McGowan government is on track in turning WA's finances around.
Labor promised to do so before its landslide election victory in March when it inherited record debt and deficit from the previous Liberal National government.
Net debt remains massive and is predicted to grow to a record $42.8 billion in 2020-21 from this year's level of $37.4 billion, according to the WA Treasury.
The deficit blow-out was blamed on delays in the delivery of Commonwealth road grants, the blocking of the gold royalty hike by the Liberals that it hoped to raise $400 million from and lower tax revenue collections.
A small but rare fall in spending is forecast for next year, with the government controversially having started cutting 3000 public sector jobs through voluntary redundancies and in areas such as education, including shutting the School of the Air.
"Wherever we make savings people will complain," Mr Wyatt said.
Some improvement is predicted over the next four years.
The projected net debt of $42.8 billion by June 2021 is $854 million less than predicted at the budget.
Treasury is also projecting budget deficits to end in 2020-21 with a surplus of $926 million, although Mr Wyatt said he would be a "brave treasurer" to promise anything that far out in a state affected by the global economy.
The size of the economy is forecast to expand by 2.5 per cent this year, driven by growth in iron ore and gas exports.
"I am happy with these figures, we are now starting to see the ship turn slowly," Mr Wyatt told reporters.
Shadow Treasurer Dean Nalder said the government was not doing anything to make meaningful inroads into debt and interest expenses and was inflicting pain on the community to fund election promises.
Chamber of Commerce and Industry of WA chief economist Rick Newnham called on the government to sell major assets and spending on the health budget, in which wages represent 60 per cent of costs.
"You cannot take a significant amount of debt off the books without selling a major asset like (electricity utility) Western Power."
