WA treasurer defends iron ore predictions

The West Australian treasurer has defended his government's optimistic outlook for the state's most valuable export commodity in the past financial year, saying iron ore prices are "bloody hard" to predict.

Audited government figures released this week showed a better-than-expected surplus for 2013/14 and a trimming of the state's substantial debt.

But after the iron ore price dropped about 40 per cent, Treasurer Mike Nahan conceded the budget outcome was "far below" what the government had forecast.

"It's a bloody hard thing to predict," he told Fairfax radio on Wednesday.

"I'm not an expert on it and I think politicians should be very, very careful about making predictions on iron ore prices."

The treasurer said if the iron ore price continued at about $US80 per tonne, the state would lose five per cent of its revenue in the current financial year.

"That's a big gap, a big challenge," he added.

Dr Nahan said the government's expenditure review committee and cabinet had been working to address the issue since July, when iron ore prices dipped below $US100/t.

But taxpayers won't find out what the government plans to do to make up the revenue shortfall until the mid-year budget review is released in December.

Opposition leader Mark McGowan criticised the Liberal-led government's budget management.

"It's been the worst financial management in the history of the state," he told Fairfax radio.

The Labor leader said the government should have been more conservative when forecasting the iron ore price for 2013/14.

"They put in a figure that over-estimated the price, therefore pumping up the finances in future years, and they were warned by numerous organisations it was overly optimistic," he said.

Standard & Poor's and Moody's Investors Service had previously downgraded WA's credit rating, citing mounting debt.