Botched major projects, ignored warnings from senior officials, governance problems and poor management of the Royalties for Regions scheme combined to cripple Western Australia's finances under the former Barnett government, a new report has found.

The Commission of Inquiry report, completed by former under treasurer John Langoulant, provided a scathing assessment of the former Liberal-National government's management of the state in leading WA to a string of large deficits and a debt bill north of $30 billion.

Premier Mark McGowan, who commissioned the report after winning the March 2017 election, said it highlighted "incompetence of a grand scale".

"The report is littered with cases of poor governance and disastrous decision making," Mr McGowan said.

"The Liberal and National parties need to apologise to the people of Western Australia."

Mr Langoulant's inquiry, which reviewed 31 matters including major projects and contracts but was dismissed as a "witch hunt" by the Liberals, identified a string of substantial problems — highlighting bungled projects such as the Perth Children's Hospital and Swan River pedestrian bridge.

The inquiry found Serco's $4.8 billion contract for managing Fiona Stanley Hospital was signed without a business case. ( ABC News: Louise Merrillees )

But its strongest criticism came for the former government's management of Royalties for Regions, saying billions of dollars were spent without a proper plan in a "knee-jerk, ad-hoc" basis and the scheme needed "major surgery".

"We identify the Royalties for Regions program as probably the main factor that caused issues for the Government," Mr Langolaunt said.

"It destabilised the Government's financial management processes."

Mr Langoulant's inquiry also found:

a $4.8 billion contract with Serco for management of the Fiona Stanley Hospital was signed without a business case being prepared, something described as "startling and astounding"

a $4.8 billion contract with Serco for management of the Fiona Stanley Hospital was signed without a business case being prepared, something described as "startling and astounding" repeated warnings from bureaucrats, particularly from Treasury, about where WA's finances were heading were ignored

repeated warnings from bureaucrats, particularly from Treasury, about where WA's finances were heading were ignored contracts were poorly managed, due in part to the reduced capability of the public service

contracts were poorly managed, due in part to the reduced capability of the public service the full cost to taxpayers of the Perth Stadium project, including transport infrastructure, will be $1.8 billion, around $200 million more than previous estimates

the full cost to taxpayers of the Perth Stadium project, including transport infrastructure, will be $1.8 billion, around $200 million more than previous estimates a $1.5 million sponsorship of the Western Force, agreed to on the eve of the state election and months before the team was axed from the Super Rugby competition, was "likely unlawful"

The report found the Perth Stadium project ended up costing taxpayers $200 million more than previously estimated. ( ABC News: Jon Sambell )

Sponsorship deal potentially 'unlawful'

On the Western Force sponsorship, paid through the Road Safety Commission, the inquiry found there was no proper assessment of the proposed deal before it was agreed to and a lack of evidence indicating it provided value to the state.

It found that arrangement was completed using a reallocation of budgeted funds using a process Mr Langoulant found was potentially in breach of the law.

Mr Langoulant said the Force sponsorship matter required further examination, and he would highlight that in forwarding his report to the Corruption and Crime Commission.

Former Treasury boss John Langoulant led the inquiry. ( ABC News: Eliza Laschon )

Speaking on ABC Radio Perth, Mr Langoulant said it was "startling" Serco's $4.8 billion contract to manage Fiona Stanley Hospital was signed without a business case being prepared.

"The Government committed to it, there was no systematic analysis of options available, the risks that the state might be exposed to, and as a result we have a contract which has a number of difficulties," Mr Langoulant said.

He said the contract contained more than 400 performance indicators.

"Serco has to provide a 10,000-page report each month to meet those performance indicators and there seems to be very little review of those 10,000 pages month-to-month," Mr Langoulant said.

Ministers, public sector questioned

The inquiry interviewed scores of bureaucrats as well as Nationals leader Mia Davies and Liberal leader Mike Nahan, although former Premier Colin Barnett declined to appear, stating that he thought the exercise was "politically motivated."

Mr Barnett instead provided a response to written questions, in which he particularly provided a defence of the operation of cabinet's assessment of projects.

"If a cabinet submission was considered to be deficient or not appropriate then it would be deferred," Mr Barnett wrote.

"I would add that these principles applied to all cabinet submissions, not just Royalties for Regions submissions."

Mr Langoulant did not accept previous defences for the financial predicament by Mr Barnett and his Liberal colleagues, who said the state's revenue hit made a slide into deficit unavoidable.

"Revenue was not a problem … this government spent too much," Mr Langolaunt said.

"I feel for this [new Labor] government, they have been dealt an impossible hand."

Former Ministers dispute findings

Ms Davies, who was Minister for Water; Forestry and Sport and Recreation during the Barnett Government, strongly rejected the criticism of management of the Royalties for Regions scheme.

She disputed Mr Langoulant's comments the issue was the biggest factor in WA's budget woes.

WA Nationals leader Mia Davies staunchly defended the Royalties for Regions program. ( ABC News: Jacob Kagi )

"We will, in no way, apologise to the people of regional Western Australia for putting them first after many many years of being left out of government decisions and expenditure," Ms Davies said.

"Royalties for Regions has transformed regional Western Australia and that is to the benefit of the whole state."

Dr Nahan insisted the report did not provide any indication of mismanagement by him, despite him serving as Treasurer for the final three years of the Barnett government.

He also disputed the findings about Treasury being sidelined during those years.

"We never ignored it, sometimes we did not agree with it in certain areas but Treasury's advice was not ignored," Mr Nahan said.

Infrastructure projects examined in WA Government finance review Land and major projects Elizabeth Quay

Elizabeth Quay Perth Stadium including the Swan River Pedestrian Bridge

Perth Stadium including the Swan River Pedestrian Bridge Land Assets sales program

Land Assets sales program Ord River Irrigation Expansion Project - contracts Royalties for Regions Pilbara Accomodation

Pilbara Accomodation Pilbara Underground Power Project

Pilbara Underground Power Project Ningaloo Centre

Ningaloo Centre Bulgarra regional sports complex

Bulgarra regional sports complex Wanangkura Stadium (Port Hedland) Health Fiona Stanley Hospital

Fiona Stanley Hospital Perth Children's Hospital

Perth Children's Hospital QEII Hospital parking

QEII Hospital parking Karratha Hospital relocation

Karratha Hospital relocation St John of God Midland Public Hospital

St John of God Midland Public Hospital Department of Health - major IT procurement

Department of Health - major IT procurement Outsourcing of non-clinical services

Outsourcing of non-clinical services NurseWest arrangement Energy Utilities Muja Power Station

Muja Power Station Synergy - billing system

Synergy - billing system Synergy and Western Power - contracts

Synergy and Western Power - contracts Western Power - Woodlands transmission line

Western Power - Woodlands transmission line Western Power - Project Vista Other Road Safety Commission and RugbyWA partnership

Road Safety Commission and RugbyWA partnership Renewable Energy buyback scheme

Renewable Energy buyback scheme Common use arrangement for temporary personnel services

Common use arrangement for temporary personnel services GovNext ICT project

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