AI Analysis Names Victoria Worst-Run State in Western World

Victoria has been labeled the worst-run state or regional government in the Western world by an AI-assisted analysis conducted by economist Maurice O'Shannassy, former CEO of BlackRock Australia.

O'Shannassy's "AI Index of Capture, Economic Mismanagement and State Stress" (AICES) ranked 366 jurisdictions based on their economic management, political capture, and accountability. Victoria received a score of 79.8 out of 100. The US state of Illinois ranked second with 77.4, followed by the Italian region of Sicily with 68.

New South Wales was ranked ninth with a score of 61. Other Australian states included Queensland at 39 and South Australia at 66. Western Australia performed best among Australian states, ranking 200th out of 366.

The analysis excluded national governments and jurisdictions that could issue their own currency to ensure a comparison of administrations with similar fiscal constraints. O'Shannassy compiled the rankings using AI models like ChatGPT and Grok, cross-referencing their outputs and conducting further reviews.

O'Shannassy stated that Victoria's low ranking was primarily due to mounting debt, significant spending blowouts on projects, entrenched networks of influence, and declining institutional accountability, rather than outright corruption.

The report did not detail specific examples, but Victoria has faced scrutiny over issues such as the cancellation of the Commonwealth Games, escalating infrastructure costs, and a projected debt burden nearing $200 billion by the end of the decade. Major projects like the Suburban Rail Loop have also drawn criticism regarding costs, transparency, and governance.

Integrity concerns have also affected Victorian politics. A royal commission into corruption within the state's taxpayer-funded construction projects is investigating allegations of criminal infiltration, intimidation, and misconduct within the building industry. The inquiry is examining longstanding allegations of corruption, violence, coercion, and bullying on Victorian construction sites.

These investigations follow a report by Geoffrey Watson SC during a Queensland inquiry. Chapters later made public alleged that corruption and criminal infiltration involving the Victorian branch of the CFMEU may have cost taxpayers up to $15 billion. Watson defended his findings despite the administrator of the CFMEU ordering the chapters removed.

The report detailed allegations of systemic bullying, unlawful conduct, intimidation, and organized crime links within the construction sector. Premier Ben Carroll established the current royal commission after replacing Jacinta Allan as Labor leader in July. Allan had previously resisted calls for such an inquiry, and both she and former premier Daniel Andrews could be called to give evidence. Illinois received the highest corruption score in O'Shannassy's index, while Sicily was noted for its high ranking in organized crime influence.

O'Shannassy's project began as research into 19th-century US state debt defaults, which led him to consider the contemporary "state of the states" globally. He described the process as starting with "vague questions" to AI about badly run states, using criteria like economic mismanagement, political capture, and accountability failures.