Let's be honest, Mildura has a local population of 30,000,
I'd be very surprised if Apple hasn't already received a dozens of complaints about the obvious location problem. I think the true thing to focus on, is why is it taking Apple so long to fix these very obvious problems?
Yes, but it's not as simple as you suggest. The fundamental problem is that the region and the city have the same name. When you type 'Mildura', it assumes you want the region and sends you to the middle of the region. If you type 'Mildura city', it sends you to the city. If you type a street address, it takes you to the street address.
For something familiar to Americans, look up cities which have their state names:
I tried 'Utah' and 'Delaware'. In both cases, the word took me to the middle of the state, NOT the city. Apparently, when given the choice between a city and a state with the same name, Maps chooses the state - which is what it did in Mildura, too. I don't think that's unreasonable behavior.
There is one exception, though: New York. When you simply enter 'New York', it takes you to the city. Presumably, they chose to override the standard 'select the state rather than the city when both have the same name' rule because of the size and population of New York City.
It's not at all clear that it's an error - just confusion caused by the use of a city and a region with the same name.