The ratings on Victoria are supported by our opinion of the strong institutional framework benefiting state governments in Australia, Victoria's very capable and conservative management, the state's resilient and diversified economy, and its robust operating position. These strengths are offset--as with all Australian states--by an institutional framework that features some structural imbalance between revenue powers and expenditure responsibilities. The state governs in a supportive financial environment. In our opinion, Australia's system support and the predictability of federal-state relations are among the strongest in the world, and we expect this to remain so. In particular, Australia adopts a system of fiscal equalization, which is administered by an independent commission. Under this system, however, Victoria receives less than its average per-capita share
