The state’s budget deficit has been shaved down by $527 million but is still tipped to be a high $3.4 billion in 2016-17.

Treasurer Mike Nahan has delivered his mid-year review with higher iron ore prices delivering a $3.7 billion boost to income but that’s been offset by lower tax revenue and GST.

The budget is expected to return to a surplus of $1.1 billion in 2020.

Dr Nahan says the debt will continue to rise as the economy is going through a significant adjustment.

He spoke with Oliver Peterson.