Govt slashes 1500 jobs in savings drive

The State Government will seek 1500 voluntary redundancies as it looks to deal with mounting debt and the day-to-day costs of running Government.

Premier Colin Barnett said there was no option but to make "harsh and fundamental" spending cuts.

He said he expected a high take-up of redundancies.

Mr Barnett said the measures were in response to deteriorating budget conditions and reflected the State Government's determination to make savings across government.

"The combined effect of a fall in the iron ore price and cuts in the GST to WA means that while the broader WA economy is generally strong, state government revenue is bearing the burden," he said.

"It is important that the Government respond to these financial constraints by cutting spending in the public sector."

Treasurer Mike Nahan said the fall in the iron ore price - down 35 per cent from Treasury's 2014/15 budget assumption - had wiped about $2 billion off the State's expected revenue for the period.

The State Government said a revenue deterioration of that magnitude in less than six months was unprecedented and would significantly reduce its capacity to deliver a budget surplus this financial year.

The savings measures will include a 15 per cent cut in non-essential spending from 2015-2016, a 15 per cent cut for "non-essential" road maintenance for three years and a further 5 per cent cut across the board to the capital works budget.

There will also be an additional one per cent efficiency dividend across all government except schools.

Treasurer Mike Nahan announced interim dividends for Synergy, Western Power and Horizon.

This will bring $159 million of revenue forward to this year.

Mr Nahan estimated the measures will save $2 billion over the forward estimates.

Mr Barnett said he was "frustrated, bordering on angry" about today's announcements.

"We've been able to carry the loss of GST with strong mining royalties. That now has gone," Mr Barnett said.

"The double hit of falling iron ore prices and falling GST revenues means that now we have to make some very harsh and fundamental changes to the State Government Budget.

"We have no option but to decrease spending across the board."

Neither the Premier of the Treasurer could guarantee the Government will deliver a surplus in 2014-2015.

Earlier this week Mr Barnett told thewest.com.au that WA's State finances were in for a volatile ride.

"You can't guarantee something like that but my objective is to always run a surplus," he said.

"With the fall in iron ore price and further cuts to GST, that will be very difficult to achieve this year.

"The rapid fall in iron ore prices has punched a hole in our Budget."

with AAP