Australia’s data centre build-out is getting bigger, but the harder constraint is shifting from power and capital to public consent and planning rules. The past week showed both sides of that tension.
A flagship project falls
Goodman Group confirmed it will no longer proceed with its Project Mars data centre in Sydney, after the project became a flashpoint for opposition to AI infrastructure. The timing was awkward for the industry. Community groups and Goodman’s own development manager had appeared at the first hearing of a federal Senate inquiry into data centres and AI the week before. Consultancy CT Group had already warned clients that local opposition has become a development risk.
It isn’t an isolated case. Consultation at another proposed site, Moss Vale in the Southern Highlands, has drawn scrutiny because its developer threatened legal action.
Ambition keeps scaling anyway
While one Sydney project retreated, others got bigger. CDC Data Centres is proposing a $15 billion, 1.4-gigawatt campus near Wagga Wagga, which would be its first regional venture. It would still rank behind Anthropic’s $32 billion proposal at Dalby in Queensland, Syncline Energy’s 2.4 GW hub in north-west Melbourne, and a large site slated near Darwin.
The money behind this is substantial. Commonwealth Bank forecasts about AUD $150 billion of investment in new Australian data centre capacity by 2030. Job postings tied to data centres have risen sharply, with New South Wales accounting for 48% of activity, Victoria 28% and Queensland 11%.
Governments are stepping in
Queensland made the most significant policy move of the week. The state will take planning and assessment of data centre applications away from local councils, citing a need to avoid inconsistency. Premier David Crisafulli said investment would need to create local jobs and help bring down electricity bills. That sets a clear test for projects in the state.
Victoria is moving on a different axis. Proposed rules under the state’s Sustainable Data Centre Action Plan would require operators to secure renewable power. For Melbourne’s growing cluster, that means energy sourcing is becoming a condition of approval rather than a commercial afterthought. Supply is still being lined up: Keppel has secured rights to lease a 123-hectare site near Morwell with up to 720MW of gross capacity.
At the federal level, the rules may arrive too late to bite on much of the pipeline. Dozens of approved but unbuilt AI data centre projects are expected to escape the proposed energy and water restrictions, because the rules are not expected to apply retrospectively. Two federal parliamentary inquiries are due to report later this year.
What it means
Three things stand out:
- Consent is now a project risk. Developers who treated community engagement as a box to tick are finding it can end a project outright.
- State frameworks are diverging. Queensland is centralising approvals, Victoria is tying approvals to renewable supply, and NSW is the centre of both activity and backlash. Operators will need a different playbook in each.
- Early movers get a regulatory head start. If federal restrictions don’t apply retrospectively, projects approved now may face lighter obligations than those that follow, a gap likely to draw political attention.
The next few months, with two inquiries reporting and state frameworks taking shape, will show whether Australia can scale its data centre footprint on terms the public accepts.
