The most senior leaders in the WA government are insisting a cancelled upgrade of the Perth Convention and Exhibition Centre (PCEC) would not have been value for money, despite the deputy premier describing the building as a "cockroach".

The government announced on Thursday it would divert the project's entire budget towards three major hospital upgrades — a pot of money said to be "at least" $1.6 billion.

At least $35 million had already been spent on planning the major revamp of the convention centre, in an attempt to make it more attractive to business and the public.

Instead, the government will use part of the funds to take over the privately owned St John of God Mount Lawley Hospital to add up to 100 extra beds to the public health system, and build a new facility at the Peel Heal

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