The West Australian government's bid to arrest mounting debt and regain the state's prized AAA credit rating has prompted the deferral of major projects, including a key election promise.

And more public sector jobs cuts could be on the way, Treasurer Troy Buswell has confirmed, with the Workforce Reform Bill expected to be passed through parliament early next year.

This would give the state government unprecedented power to dismiss workers and allow for large scale terminations.

By deferring and cutting projects and programs, the WA government expects to cut net debt by $1.5 billion over the next three and a half years.

The most notable change is a three year delay to the $1.8 billion MAX light rail project, which was one of the main planks of the party’s election pledges earlier this year. It is designed to ease congestion on Perth’s roads.

The promise was paired with a $1.895 billion proposal to construct a rail line connecting the rapidly growing eastern suburbs to the city via the airport, which is still going ahead.

The commencement date for the airport link has not changed but there has been a minor extension in construction time following engineering advice, Mr Buswell said.

Doing both developments at the same time was too ambitious, he said.

He denied the party had lied while on the hustings when it said the projects were fully funded and fully costed.

“It was a difficult choice to make but we had to choose one,” he said.

“The MAX light rail will be built.

“The timeframe has shifted, there is no doubt about that. But I can happily look people in the eye and say that we’re making the decisions we need to make to sensibly manage the state finances.”

Deferring MAX has improved the look of the state government’s balance sheet, delaying $432 million in expenditure to the years 2016/17.

The Treasurer also announced the much-needed refurbishment of Royal Perth Hospital and redevelopment of Graylands psychiatric hospital, which had been “reprioritised”.

This will free up $238.2 million for a computing system at the new Fiona Stanley Hospital and the move into the new Perth Children’s Hospital.

The WA government also added detail to previously flagged asset sales plans, with the Kaleeya Maternity hospital in Fremantle, the Utah Point bulk terminal in Port Hedland and the Kwinana Bulk Terminal south of Perth all on the chopping block.

Putting the brakes on the state’s mounting debt was essential for regaining the AAA credit rating, Mr Buswell said.

“We have to respond very strongly to observations made by ratings agencies.”

A $437 million surplus is forecast for this financial year, a $51 million improvement on the figure provided in the August budget.

Revenue had improved thanks to higher iron ore export volumes, a slightly higher price for the commodity and better GST receipts thanks to the federal government keeping iron ore fines in the “low value” royalty category, Mr Buswell said.