Major capital works projects deferred

The state government has suspended or deferred capital works projects worth $565 million to make room for its preferred projects in areas like health, power and water.

The decision reflects the big increse in costs and the acute labour shortages in Western Australia's overheated construction sector.

After adjusting for the deferred projects, the government will still spend a record $5.8 billion on capital works next financial year.

As expected, the government has suspended the Northbridge Link project, saving $133 million next year and $255 million in total.

It has also suspended the planned $24 million upgrade of Members Equity stadium, which had been earmarked as the new home for the Western Force rugby team.

Treasurer Eric Ripper said the government has not made any decisions, nor provided any funding, for a major new sporting stadium.

The government has also deferred spending on a wide range of other projects for six to 12 months.

These include the Lancelin to Cervantes Road (saving $45 million in 2007-08), the Department of Agriculture headquarters ($45 million), the Integrated Agriculture Institute ($23 million), the Perth Police Complex in Northbridge ($18 million), the Riverside redevelopment project in East Perth ($9 million) and stage 3 of Challenger TAFE in Fremantle ($6.5 million).

The government had also budgeted to spend $108 million upgrading port infrastructure to accommodate the expansion of Rio Tinto's HIsmelt project.

It has deferred this spending since Rio has not committed to the expansion.

Mr Ripper said these decisions would ensure the projects could be delivered and that taxpayers would get value for money when they do proceed.

The capital works budget is dominated by big ticket areas of electricity, water supply, road construction and health.

The government has set aside $750 million to cover construction of a major new water supply source, likely to be either development of the Yaragadee aquifer or construction of a second desalination plant.

Mr Ripper said WA was spending $2,218 per person on infrastructure, higher than every other state except Queensland.