The Australian Prime Minister has intervened to block new data center construction in residential proximity zones.
Developers will be blocked from building data centres near homes, schools, or prime agricultural land under a national agreement that Prime Minister Anthony Albanese is working to secure with state governments. The restrictions form part of broader obligations Albanese will outline in a speech to the Business Council of Australia annual dinner, ahead of a critical national cabinet meeting on Wednesday with Queensland Premier David Crisafulli.
Under the proposed framework, new data centres would be required to inject more renewable energy into the grid than they consume and minimise water usage. They must also mitigate community impacts by being proportionate to their scale and avoiding sites suitable for housing development. This policy could effectively halt proposals such as NextDC’s planned facility in Macquarie Park, Sydney’s north, which sits adjacent to a metro station. The City of Ryde has strongly opposed the project, arguing it would lead to underutilised transport infrastructure and exacerbate the housing shortage.
In his address on Tuesday, Mr Albanese will emphasise that Australia must capitalise on AI’s opportunities while mitigating its risks. “Australia is in a strong position to attract investment in data centres, but maintaining social licence will be essential,” he will say. “That means ensuring energy bills do not rise, water security is maintained and locations are appropriate. Getting this right can ensure Australia is the infrastructure partner for our region, aided by our status as a Five Eyes partner.”
Mr Albanese has pledged to introduce mandatory standards for AI and data centres by early 2027, with Wednesday’s national cabinet session serving as the next step toward securing interstate consensus. However, Mr Crisafulli is expected to resist the renewable energy mandate, warning it could deter investment and increase electricity costs. Instead, Queensland is developing its own regulatory approach, permitting data centres to utilise gas and coal power while mandating social impact assessments and local council agreements. “We are technology agnostic. And by doing so, we will be able to bring on all forms of energy,” Mr Crisafulli told reporters on Monday.
Business Council chief executive Bran Black has welcomed the prime minister’s proactive stance on AI. Speaking separately at the same event, Mr Black will argue that Australia must avoid falling behind globally in the adoption of AI and other emerging technologies. Tracking AI uptake will feature in a national roadmap he plans to unveil, aimed at positioning Australia as a top-10 investment destination and reversing declining productivity and living standards.
Mr Black will also voice corporate opposition to proposed budget tax changes, alongside renewed concerns over what he describes as a “complex and out-of-balance” industrial relations system and excessive regulation. On a positive note, businesses have responded favourably to Treasurer Jim Chalmers’ announcement on Monday of a new Productivity Commission review into reporting requirements. Coupled with Treasury’s release of a consultation paper on climate-related financial disclosures, Australian Chamber of Commerce and Industry chief executive Andrew McKellar called the moves a “positive step towards reducing unnecessary compliance costs and red tape.”