Perth’s new multi-purpose stadium would be built on the Burswood Peninsula and is scheduled for completion in 2018, Premier Colin Barnett has said.

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Perth’s new multi-purpose stadium would be built on the Burswood Peninsula and is scheduled for completion in 2018, Premier Colin Barnett has said.

The new Perth Stadium will have the third-biggest capacity in Australia and will be the second largest AFL home stadium.

It will have a capacity of 60,000 seats with provision for future expansion to 70,000 seats in the style of Melbourne’s Etihad Stadium, with similar views, amenities and comfort.

The Premier's announcement followed an exclusive report in The West Australian today that Cabinet had approved the plan yesterday.

Mr Barnett today said that the Burswood Peninsula was unconstrained by surrounding development and Government-owned, "which will allow us to achieve the vision of a world-class stadium precinct".

“The new stadium will be the centrepiece of an emerging eastside precinct at the gateway to Perth and is within walking distance of a range of potential transport options including footbridges, ferries, and trains," he said in a statement.

“We want people going to the stadium for an event to catch public transport. The new Perth Stadium will deliver a high quality, state-of-the-art facility all West Australians can be proud of.

“To help us achieve this, there will be an international design competition to attract the best ideas."

The 2011-12 State Budget allocated a total of $13 million over two years for planning of the new stadium.

The final cost will be determined after the design process has been completed. However, the current indicative cost for the stadium is approximately $700 million, excluding costs associated with upgrades to transport infrastructure.

The design will not include an underground carpark.

The Premier said geotechnical problems will be solved by anchoring the stadium to 30m-deep pylons driven into bedrock.

Lighting will be in Eagles and Dockers colours, depending on who is playing.

The stadium will be linked to East Perth by a footbridge.

A four-platform train station will be built so that every train line can come directly into the stadium.

Sport and Recreation Minister Terry Waldron said a steering committee would be established to oversee the project and will be co-chaired by the executive director of the Office of Strategic Projects Richard Mann and director general of the Department of Sport and Recreation Ron Alexander.

The West Australian reported today that the plan was endorsed after ministers were convinced the Burswood site was stable and the arena was affordable.

No geotechnical testing has been done at the site near the Graham Farmer Freeway.

The Government is yet to pinpoint how much it will cost to upgrade transport links to the Burswood Peninsula, with a ferry terminal, a pedestrian footbridge and a bigger train station at Belmont Park racecourse likely to add hundreds of millions of dollars to the final bill.

It is understood the Government is keen for James Packer to contribute to the transport upgrades because the billionaire's Burswood Casino complex will benefit from the improvements.

The prediction that the stadium can be built for well under $1 billion will raise eyebrows, given that in 2006 a task force charged with investigating the best stadium site put the cost of building an arena at Burswood at $685 million, assuming construction started in 2008 and finished in March 2013.

A five-year construction timeline, starting within two years, would push that price to more than $900 million, once construction inflation is factored in.

The task force, headed by former under-treasurer John Langoulant, noted that a stadium at Burswood would "greatly enhance the national and international reputation of the City of Perth".

But the report warned the venue would present transport problems because access was restricted to Victoria Park Drive and the nearby train station was at capacity.

It also flagged engineering headaches because the peninsula used to be a rubbish tip.

It is understood the Government is using soil testing by companies which built the casino and nearby apartment towers as evidence the site is suitable.

The task force put the total cost of the Burswood option, including transport needs, at $1.147 billion. Increasing construction costs since the report suggest the bill will be close to $1.5 billion, assuming work begins within two years.

Premier Colin Barnett has championed Burswood as the best location for the stadium. The tennis centre site is several hundred metres east of the area considered by the Langoulant task force.