Western Australia's parlous financial situation is improving at a faster rate than expected, with Treasurer Ben Wyatt revealing the budget deficit for the first six months of the financial year has almost halved.

The figures, sourced from Treasury, show the half-year budget deficit at $701 million — almost 50 per cent lower than the projected forecast deficit of $1.4 billion.

The deficit for the full year was forecast to be $2.6 billion but on current trends it is like to be at least $1 billion lower.

Mr Wyatt attributed the improvement to Labor's tough approach to cut spending and limit public services pay rises.

"One of the key drivers of this result is that expense growth in health has been kept to 1.1 per cent," he said.

Health expense growth has been kept in check, helping WA's bottom line, Treasurer Ben Wyatt says. ( ABC: Emma Wynne )

"The iron ore price is having a positive impact and [we've achieved] more efficiencies in our utilities such as Western Power and Synergy and the Water Corporation, and very tight expense controls.

"By way of comparison, in the first year of the Barnett Government, the first six months had expense growth of over 13 per cent. At the moment we are tracking at 0.3 per cent.

"While we still expect a budget deficit this year, every dollar we can reduce that by means it's a dollar less that we have to borrow from overseas."

Housing market weakness

Mr Wyatt said it was an encouraging start to reining in the state's debt, which is still forecast to peak $41 billion before returning to surplus by 2021.

"It's certainly too early to claim victory over that trajectory [of state debt] because while you are running large budget deficits they have to be funded by debt," he said.

WA's housing market continues to be weak. ( ABC News: Graeme Powell )

"So there is still more work to happen there.

"We're still expecting a return to budget surplus by 2020-21, we are determined to get there."

Mr Wyatt also conceded there were still signs of weakness in the West Australian economy, especially in the housing market, with revenue from land tax falling by more than $130 million.

"But overall, our payroll tax is holding as we expected and that is the first time that's happened in about four years, and I think that is perhaps the best sign that the WA economy is starting to transition out of the decline and starting to increase again," he said.

"It's still soft, but we are very positive about the WA economy."

Mr Wyatt said the finances are expected to improve further in the next few years once voluntary redundancies across the public sector have concluded.

The Government wants to cut 3,000 public servant positions, which is expected to cost about $200 million.

So far 3,500 public servants have applied for a voluntary redundancy, but Mr Wyatt said not all of them would be accepted, and the deadline to review the applications had been extended from the end of March to the end of June.

"I'm not surprised by the level of interest, but we need to make sure the redundancies are targeted well," he said.

Concern at public sector cuts

But Community and Public Sector Union state secretary Toni Walkington said the redundancies would adversely impact public services.

Ms Walkington said five of the state's 12 prison superintendents had accepted voluntary redundancies.

"So we are losing close to half of that long-term experience, knowledge and expertise and that is going to be hard to replace," she said.

The CPSU is concerned about public sector redundancies. ( ABC News - file image )

"We already know that Corrective Services was finding it difficult to manage people in the community, who are under community orders rather than custodial orders.

"They've certainly found it difficult to ensure the provision of treatment program, education, vocational education and training to maximise rehabilitation and prevent further crime.

"They [the Government] are now in the process of offering people voluntary severance packages that a month or two ago they said they wouldn't be able to do without."

Ms Walkington claimed the Government had done a poor job of deciding which workers would be given a redundancy package.

"The reports from our members, as they let us know they are accepting redundancy packages, are coming from people who are close to retirement in most cases," she said.

"In the state public service, 26 per cent of people are aged over 55, so it's not surprising that you will get a lot of expression of interest from people who are looking to start retirement a year of two earlier than they might have otherwise."

She said similar cuts to the public service in the past had led to increased workloads for remaining staff, which often led to more stress, anxiety and mental illness.