Before the discovery of petroleum and natural gas, the brown coal deposits near Moe-Yallourn were the mineral deposits of greatest value to the state. The focus of attention then shifted to natural gas fields in the waters of East Gippsland and oil fields in the eastern Bass Strait. All these fields have been linked by pipelines to the Longford gas-processing and crude-stabilization plant in Gippsland and the Long Island Point fractionation and crude-storage plant on Western Port Bay. More recently, gas fields have been discovered in the western Bass Strait off Cape Otway. Although a major portion of its known reserves had been consumed by the turn of the 21st century, Victoria has continued to produce nearly one-fifth of Australia’s petroleum and half of its natural gas requirements.

The Latrobe Valley in the Gippsland Plains is noted for the generation of electric power. Large brown coal deposits in the region have been tapped as an energy source since the early 20th century. The Latrobe Valley coal mines supply several thermal power stations and provide the bulk of the state’s electricity.

Manufacturing

The state’s manufacturing sector employs some one-seventh of the labour force, the vast majority of whom work in the factories of Melbourne and Geelong and in the coalfield centres of the Latrobe Valley. The original industrial suburbs of Melbourne had a central location, but many new factories have been constructed in peripheral areas, such as Altona, Dandenong, Broadmeadows, and Moorabbin, where larger areas of cheaper land were available. Geelong, like Melbourne, produces a wide range of products. Aside from electricity generation, industry in the Latrobe Valley centres on food and clothing manufacture, using local materials. Although a relatively small portion of the factories employ more than 50 workers, such factories employ most of the total workforce. In terms of numbers employed and value of wages, the most important manufactures include metal products and machinery, clothing, textiles, beverages and foodstuffs, print items and media, petroleum products and chemicals, and paper products. While the contribution of manufacturing to the overall state economy has declined since the last decade of the 20th century, Victoria has continued to be a leader of the country’s manufacturing sector.

Services

The decline in Victoria’s manufacturing sector as a result of the steady removal of protective tariffs and a flood of comparatively inexpensive imports from China, Japan, and Southeast Asia was countered to a degree by expansion in service activities, now the mainstay of the state’s economy. In the early 21st century, services accounted for roughly four-fifths of the state’s economic output and nearly the same proportion of the labour pool. The strongest employment growth had occurred in property and business services, as well as in health and community services.

Tourism, constituting a relatively small portion of the state’s overall economy and employment, nonetheless has been growing in importance. Victoria has come to command more than one-fifth of the national tourism sector. Other service activities, including information and communications technologies and education, have also been on the rise.

Transportation

The major port and the focus of the rail, air, and road systems is Melbourne. Melbourne and Geelong ports between themselves handle most of the cargo entering and leaving the state, and Melbourne is the dominant passenger terminal. State-owned railways serve all productive areas through the several thousands of miles of mainly single-track lines. Since 1962 narrow-gauge tracks have linked Melbourne with the standard system of New South Wales at Albury. The capital’s electrified metropolitan rail system carries thousands of passengers each working day, although the vast majority of working people drive to their place of employment. Melbourne Airport, just northwest of the city, was opened to international flights in 1970 and to domestic flights in 1971; it includes a major freight terminal. Multilane divided highways link all the major centres of the state.