Risks in the global economy, weaker royalties, a weak housing market and the high Australian dollar have been blamed for the West Australian government cutting its projected surplus by more than $200 million.

WA is expected to record a $209 million surplus, making it the nation's highest surplus for 2011-12.

But the projected surplus is significantly lower than the $442 million forecast at budget time.

The figure was released on Wednesday as part of the Liberal-National government's mid-year review.

Treasurer Christian Porter said there had been many changes to the global economy since the May state budget.

"There's been one single unanticipated economic phenomena that has occurred since the time of delivering the budget in May, which has had a very significant impact on the WA state economy - that is the events that are unfolding in Europe," he said.

Mr Porter said the European sovereign debt crisis and a slower than expected recovery in the US economy had been major factors in the revised estimates.

He said the royalty revenue had been revised downwards to $970 million over the budget and forward estimates period because of a higher $US/$A exchange rate and the impact of lower iron ore, oil and base metals prices.

Mr Porter said that while the European Union accounted for just six per cent of WA's merchandise exports, it provided 20 per cent of China's exports, which could affect WA.

He said that if conditions in Europe worsened and affected the availability and cost of credit, major resource projects in WA could be delayed.

Mr Porter said general government expenses in 2011-12 were forecast to be $24.9 billion, which was about $112 million higher than estimated in May.

This was due to several factors including $55 million spent on natural disasters such as floods and bushfires, and $30 million spent on the Redress WA scheme for adults abused as children in state care.

Payroll tax has been better forecast, which has led to a $105 million upwards revision to the 2011-12 estimate.

However, the housing market remains weak with both house prices and sales volumes lower than the budget forecasts.

WA residents will also face a 12 per cent hike in electricity bills, but Mr Porter has blamed the federal government for it, noting that seven per cent of the increase was due to the carbon tax.

The state's net debt was projected to be $16.6 billion by June 2012, which is $709 million lower than predicted at budget time.

Mr Porter said the main contributing factor to WA's net debt was the need to borrow to build critical infrastructure to offset the federal government's cuts to the state's GST revenue, which will drop to $2.1 billion by 2014-15.

The treasurer said business investment would continue to drive economic growth, pointing to the recently approved $29 billion Wheatstone LNG project.

However, both the state opposition and a peak business lobby group have called on the WA government to control its spending.

Opposition spokeswoman Michelle Roberts said government revenue had increased by 35 per cent over three years, and household costs such as electricity and water had gone up dramatically.

She said the review showed state debt would be $24 billion by 2015, while it was $3.6 billion under a Labor government in June 2008.

Chamber of Commerce and Industry chief economist John Nicolaou said the government was relying on business to prop up the state's budget position, but it should be looking to help them through these difficult times by easing high business costs.