This article was written by EFA intern Maya Layish.
For most people, the word ‘community’ evokes images of neighbourhood gatherings and shared public spaces – not sprawling data centres humming away on the edge of town. Yet as Australia’s digital economy expands, a new kind of community is emerging: one built around servers, energy infrastructure and the demands of artificial intelligence.
This matters. The race to build the foundations of the AI era will determine not only Australia’s technological future, but the physical environments in which all Australians live.
An unprecedented boom
Data centres store and process the information that underpins almost everything we do online. In recent years, demand for these vast warehouses has surged as artificial intelligence systems require unprecedented levels of computing power to train and operate. The parallels to the 1850s gold rush are hard to ignore: capital and speculation arriving ahead of regulation, and the communities nearest the boom left to absorb its costs.
Australia is now the world’s second-largest destination for data centre investment, with proposed projects valued at approximately $48 billion – enough for OpenAI chief executive Sam Altman to suggest that the country could become a ‘data centre capital of the world’.
That enthusiasm deserves closer scrutiny.
Much of it is being driven by the very companies that stand to benefit most from AI infrastructure expansion, while governments appear increasingly receptive to industry promises of economic growth without careful assessment of the environmental, social, and democratic implications of these projects.
In the past year alone, Microsoft announced plans to invest $25 billion in Australian data centre infrastructure, while Amazon Web Services committed a further $20 billion. As pressure mounts to accelerate approvals and remove perceived barriers to development, Australia risks committing to a generational build-out of AI infrastructure before the regulatory safeguards needed to govern it are in place.
The rush to build AI infrastructure evokes economist Yanis Varoufakis’s concept of ‘technofeudalism’: the concentration of economic and political power in the hands of those who control the digital platforms and infrastructure on which modern life depends.
Data centres are the physical backbone of the new digital order. As governments compete to attract investment from global technology companies, public resources and community interests are under threat of capture by a small handful of powerful firms whose influence extends far beyond the marketplace.
A policy response with a catch
In response, Prime Minister Anthony Albanese recently announced the development of new Australian Standards for AI. ‘Our Australian standards will also set clear rules for large data centres, where they are built, and the power and water they use’, Albanese said. The proposed framework would require operators to minimise water consumption, maximise their energy efficiency and fund any additional water infrastructure required by their developments.
But funding new water infrastructure is a poor remedy if hyperscalers are simultaneously drawing down already-stressed reservoirs and aquifers to cool their facilities – particularly now. The Bureau of Meteorology has confirmed a strong El Niño event is underway, with forecasters warning it could rank among the strongest in more than a century, bringing drier and hotter conditions across much of eastern and southern Australia. Victoria’s own storage levels already reflect the strain: as of late July 2026, Melbourne’s water storages sit at 66 per cent, down six percentage points on the previous year.
Against this backdrop, hard questions follow. If storages fall to critical levels, who gets priority access – is it the international hyperscalers running temperature-controlled server halls, or the communities around them? And in a market-driven system, will scarcity simply be priced, with the cost of water passed on to ordinary households and businesses while data centres secure supply through commercial contracts?
Projections paint a bleak future. By 2030, Australian data centres are projected to consume as much electricity as every household in Victoria combined, while water consumption is forecast to more than triple. The Climate Council has warned that, without significant new renewable generation and storage, growing demand from data centres could push wholesale electricity prices more than 20 per cent higher by 2035.
These are real, pressing concerns. Access to power and water cannot be treated as commercial inputs to be optimised: they are internationally recognised human rights, formally affirmed by the UN General Assembly in 2010. These are the kind of trade-offs a credible regulatory framework needs to resolve before approvals are fast-tracked, not after. As Australian Conservation Foundation CEO Adam Bandt put it, ‘Communities want better protection for their local environment, their water resources, and the climate – not fast-tracked approvals for tech giants’.
Notably, Albanese himself described these measures as ‘expectations’ – and expectations are not law. Voluntary guidelines and industry codes of conduct are no substitute for enforceable regulation. While the Government has since flagged an intention to legislate mandatory standards, with draft legislation expected in early 2027, this leaves a clear window in which billions of dollars of data centre investment can proceed under rules that carry no legal force.
Even more troubling: many of these facilities are being built not in remote industrial areas, but on the doorstep of existing communities.
Lane Cove West and Macquarie Park: a preview
In Sydney’s Lane Cove West, residents already report a low, constant hum from an existing facility carrying through the surrounding bushland. The area could soon host several more. Property developer Goodman has proposed ‘Project Mars’, a facility that would sit roughly 50 metres from the backyard of one ABC News interviewee and only 160 metres from the primary school her daughters attend. Three additional projects have also been proposed nearby, meaning as many as five facilities could eventually operate within earshot of homes, a school and the Lane Cove River.
Nearby, Ryde Council’s Macquarie Park precinct offers an insight into what a concentrated data centre landscape looks like in practice. Five facilities are already operating in the area, with six more proposed. In a submission to a New South Wales parliamentary inquiry, the council warned that Macquarie Park was ‘dangerously nearing saturation point’ and risked becoming ‘a residential dormitory and data centre wasteland’.
A similar pattern is emerging in Melbourne. In Plumpton, approximately 30 kilometres north-west of the CBD, developers have proposed what would be one of the largest data centre projects ever built in Australia: a 350-hectare site containing four data centre buildings with a maximum capacity of 2.4 gigawatts, occupying around 140 hectares – almost six times the size of Chadstone Shopping Centre. If completed, it would exceed the scale of any data centre currently operating in Australia, and consume more electricity than Victoria’s largest power station, Loy Yang A, generates.
For many residents, news of the project arrived not through a public consultation process but via a letterbox flyer offering a ‘friendly introduction from the team behind the Victorian AI Hub’. By that point, however, details of the proposal had already circulated widely through social media and news coverage.
The scale of the development has generated sizeable community concern. A petition calling on the Victorian Government to fully assess the environmental, cultural, social, and infrastructure impacts of the project has attracted more than 3,600 signatures. The petition also calls on the Victorian Government to consider the cumulative effects of other proposed data centres. For some locals, the project has reinforced a broader perception that Melbourne’s western suburbs are increasingly being treated as a convenient location for developments that wealthier or more politically influential communities might resist.
Who bears the cost?
The debate over data centres should not be framed simply as a question of technological progress – what does ‘progress’ even mean when adoption of a technology is driven less by public demand than by the commercial imperatives of a handful of global platforms?
AI infrastructure is being built at extraordinary speed and scale not because Australian communities asked for it, but because Big Tech firms need the compute, and governments have decided that hosting it is in the national interest.
The Federal Government has framed its Australian Standards as building ‘sovereign digital infrastructure’, but this conflates hosting hardware with owning capability. If the land, power and water are Australian while the models, chips and rents remain foreign-controlled, Australia risks becoming a sophisticated facilities manager for an AI economy it does not actually own.
A more genuine form of digital sovereignty would mean not just attracting capital but shaping the terms on which that capital operates. The people who live beside this infrastructure must get a real say in whether, and how, it gets built.
EFA seeks to address this gap. In our recent submission to the Senate inquiry into Artificial Intelligence and Data Centres, EFA calls for mandatory community consultation requirements for major data centre developments. This includes accessible public information, independent technical advice for affected residents, and stronger powers for local councils.
Without those risk assessments, safeguards and strong ex ante laws that regulate AI safety and the rollout of the infrastructure to support it, there is a very significant risk that local democratic accountability will be sidelined in favour of fast-tracked approvals and investment incentives.
The long-term consequences of this expansion may remain uncertain, but one thing is already strikingly clear: the infrastructure powering the digital age is no longer hidden from view. That visibility demands accountability – consultation cannot be a box-ticking exercise. Communities must be given the opportunity to influence decisions that will affect their neighbourhoods, resources and quality of life for decades to come. Residents cannot be expected to absorb the impacts of large-scale developments without having a meaningful say in whether, and under what conditions, those projects proceed.
Image credit: Geoffrey Moffett /Unsplash