WA iron ore price forecast 'conservative'

Iron ore price projections in the West Australian budget are even more conservative than the federal government's forecasts.

The WA government expects the 2015/16 price will be $US47.50 per tonne, just under Commonwealth forecasts of $US48/t.

Last year, the state government was accused of being overly optimistic, assuming a 2014/15 price of almost $US123/t.

In December's mid year review, after the price plunged to a five-and-a-half year low, it dropped the forecast to $US75.

But Treasurer Mike Nahan, who used to work as a commodity price analyst, told 6PR on Friday that one of his critics had expected a price this financial year of $134/t, and "if we'd listened to him, we would have been in more trouble."

He joked at an earlier business breakfast that the lesson was not to pay too much for forecasts.

"I used to do this for a living - that's why I changed jobs," he said, drawing laughter from the audience.

Dr Nahan disagreed the WA government had been the outlier last year, saying "we were smack dab in the middle".

He said the latest estimates were conservative, but "this is an uncertain world that we live in, and that's what we're budgeting for".

The treasurer later admitted on ABC radio that the state government had been caught out assuming the boom would continue, embarking on an "extremely ambitious" capital spend.

Most of that had been necessary work on utilities, roads, hospitals and schools as the population continued to grow.

"On the other things, the stadium, Elizabeth Quay, those urban renewal and recreational facilities which are underway now, we did that on the basis of expected continued large flows of income from iron ore royalties.

"And that simply has evaporated."