While a range of exogenous and endogenous factors affect the standard of living of most Australians in a more-or-less uniform way, the different social and economic policies of each state government are likely to affect the levels of sustainable well-being experienced across the various states. With this in mind, a Genuine Progress Indicator (GPI) - a newly devised measure of sustainable well-being - is calculated for Victoria and the Rest-of-Australia (Australia minus Victoria) for the period 1986-2003. The GPI takes account of the various costs and benefits of economic activity in order to investigate the impact of a growing state or national economy on sustainable well-being.

By analysing the GPI results and the policies undertaken by the Victorian government, it is possible to determine what the state of Victoria is doing differently to the Rest-of-Australia that might be beneficial or detrimental to sustainable well-being. While our study reveals that Victoria is performing better than the Rest-of-Australia, it also highlights flaws in the policy-making process that have resulted in Victoria's Gross State Product (GSP) overstating its genuine progress.