Serious doubts have been raised about a key WA Labor strategy designed to drive down state debt, with the business lobby labelling it inherently flawed and a cop-out.

The Chamber of Commerce and Industry [CCI] said Labor's conditional plan to use half of iron ore royalties to reduce borrowings was extremely unlikely to have any impact on WA's $33 billion public sector debt.

The CCI's criticism relates to the conditions of the proposal, as it would only apply when WA's GST distribution surpassed 65 per cent of its per capita distribution at the same time as the iron ore price exceeded $85 per tonne.

Treasury has forecast both figures will remain well below those thresholds every year between now and at least 2020.

The two prerequisites have only twice been met simultaneously, in 2010-11 and 2011-12, since the introduction of the GST in 2000.

Had the policy been in place throughout that time, $3.9 billion would have been allocated towards paying down debt as a result.

Labor pointed to Prime Minister Malcolm Turnbull's promise of a GST floor — under which no state's share of the distribution could fall below — to deny accusations the policy would be toothless.

However, CCI chief economist Rick Newnham said the policy would achieve nothing without change to the GST system, as WA's share from the tax dropped in line with iron ore price increases.

"It is incredibly unlikely those two conditions would be met at the same time," Mr Newnham said.

"We don't believe in any way their proposal will pay down debt ... Labor's plan is a plan to not pay down any debt in the next four years."

Labor leader Mark McGowan said the fact the two conditions had previously been met simultaneously, as well as the promise of a GST floor, meant the policy would make a difference.

"If Malcolm Turnbull is to be taken at his word, that policy will be effective," Mr McGowan said.

"When the GST floor comes in, of course this policy will ensure money goes into debt reduction and future Liberal governments can't blow it."