Flush with funds amid surging commodity prices, Western Australia is set to deliver another budget surplus, along with sweeping measures to fight the cost of living.

The surplus in Thursday’s state budget is tipped to fall short of last year’s record $5.8 billion but would still lead the nation, with some analysts forecasting about $2.5b.

The WA government has already announced billions of dollars in new spending measures to improve the health system and ease the housing shortage.

On Wednesday, Premier Mark McGowan also flagged spending to help families combat growing cost of living pressures but was giving little away.

“We have the strongest set of finances in Australia and you’ll see significant initiatives to support cost of living for families across WA that we’ll announce,” he said a day out from the budget.

Economist Alan Duncan said increased royalties, strong domestic spending, higher GST revenues and fiscal restraint had helped the state post successive surpluses.

“WA is in a better economic position than pretty much all other states because of the continued strength of the resources sector, a resilient iron ore price, low unemployment and strong household consumption,” the Bankwest Curtin Economics Centre director said.

Shadow treasurer Steve Thomas said meaningful cost of living relief for people struggling to make ends meet was needed.

The opposition has called on the government to provide a $300 million boost to spending over the next two years to enable charities supporting vulnerable people to cope with the surge in demand.

The government has promised $511m for social housing and loan programs to combat home shortages and pledged $2.6b toward homelessness measures over two years.

The sector’s peak body, Shelter WA, welcomed the investment but said more must be done to boost homelessness services and provide desperately needed social and affordable rental housing.

“Our sector is being pushed to the limits by the housing and cost of living crisis,” chief executive Kath Snell said.

WA Council of Social Service chief executive Louise Giolitto said struggling rental households needed support through a re-introduction of a rent relief scheme to keep a roof over their heads while the promised social housing stock was built.

Other measures to be included in the financial document include $1.2b for the first stage of upgrades to public hospital infrastructure across WA for more beds and services and expanded capacity to reduce waiting times.

A further $420m will be spent to modernise mental health patient care and expand services, increasing the WA’s annual mental health spend to $1.4b.