The Conversation collected almost 350 reader questions about data centres and put the nine most common to nine academics on 14 September 2026. They are the questions operators of data centres in Australia hear at every planning panel, and several of them have been tested here before.
Four of the answers go wrong on a number, or on what a number counts, and all four make the industry's footprint look larger or the rules on it look thinner than the primary documents support. The largest puts Sydney's daily water use at 556 billion litres, which is the city's supply for a whole year, because a yearly total was read as a daily one. Three of the underlying concerns survive: Sydney's water supply, the timing of council involvement in site selection, and unfunded physical security.
The claim | What the source says | Source |
|---|---|---|
Sydney uses 556 billion litres a day | 556.5 billion litres a year, or 1.53 billion a day | Sydney Water Annual Report 2024-25 |
The existing fleet uses 100 megawatts | 1.4 gigawatts operating at 31 March 2026 | DC Byte and Data Centres Australia, April 2026 |
More than 200 centres are in planning | 252 projects tracked at every stage, of which 90 are in the pipeline | DC Byte, via Data Centres Australia |
50 submissions force an independent referral | 100 unique objections, for a data centre | Instrument of Delegation, 18 August 2026 |
1. Who owns the data inside an Australian data centre?
The operator holds it. The customer, or the software company it buys from, owns it.
Olivia Shen of the United States Studies Centre gets that right, and the warning behind it too: data kept on Australian soil can still fall within a foreign parent's legal reach, because the United States CLOUD Act reaches data in a US company's "possession, custody, or control" wherever it sits.
Australia audits that control test in one place. The Digital Transformation Agency's Hosting Certification Framework checks ownership, personnel and supply chain for facilities holding government workloads, and the certified facilities are listed publicly. It covers government hosting, so commercial workloads rely on contract terms. A buyer should ask where the vendor's parent company is incorporated. Australian data residency claims most often dodge that question.
2. Are data centres regulated in Australia?
Yes, by several laws at once. None of them was written for data centres.
Curtin University philosopher Jacqueline Boaks answers "in short, they're not", and that is wrong as stated. Data storage or processing is a declared sector under the Security of Critical Infrastructure Act, and a facility serving government or another critical infrastructure operator carries risk management duties and must report cyber incidents. The Privacy Act governs what is held. Planning law applies to every site.
National Cabinet agreed on 26 August 2026 to develop consistent mandatory standards for energy, water and land use, with legislation flagged for early 2027. Nothing has been drafted and no enforcer has been named, the March 2026 national expectations are guidance rather than law, and the state rules vary widely, as the state-by-state policy map sets out.
Boaks puts the number of centres waiting on those rules at more than 200, which is DC Byte's count of 252 projects tracked at every stage, from early rumour to operating. Ninety are in the pipeline.
3. Can a community stop a data centre being built nearby?
Rarely stop one outright. But 100 objections takes the decision away from the department and hands it to an independent commission.
The department counts objections, not submissions, and the Instrument of Delegation signed on 18 August 2026 sets a separate bar for data centres: the department keeps the decision below 100 unique objections, against 50 for other State Significant Development. A reportable political donation or an unwithdrawn council objection also sends the file across. Bronwyn Cumbo, who studies community consultation at the University of Technology Sydney, puts the trigger at 50 submissions.
Goodman's Project Mars at Lane Cove West drew 374 submissions, nine of them in support, and was still awaiting the developer's response on 15 September 2026. Whether it clears the bar is not yet public, because the department counts unique objections rather than submissions and the instrument setting the 100 arrived in August, after the application went on public comment. Cumbo closes on sequencing: councils arrive after the land is bought and the design fixed. Councils that see a design early raise fewer objections, approvals run closer to schedule, and the industry has its own reason to want them in the room sooner.
4. Why are data centres built close to cities?
Because an AI answer has to be generated on the spot, and the transmission and fibre that carry it were built where the people are.
RMIT's Sarah Barns puts the existing fleet at 100 megawatts, against a pipeline needing six gigawatts. DC Byte counted 1.4 gigawatts operating across 162 facilities at 31 March 2026 in the forecast it published with Data Centres Australia, and 1.6 gigawatts by June 2026 in the economic study Mandala prepared for the same body in August. At 100 megawatts the six-gigawatt pipeline looks like a standing start; at 1.4 gigawatts it is a fourfold build on a fleet that already exists.
Running an AI model to answer a request cannot be cached the way a streamed episode can, so serving those models to users in Sydney and Melbourne pulls capacity toward those users. A new grid connection can take years, so developers follow the substations that already exist, which is why the fight for capacity is fiercest in western Sydney and not in open country. Pipeline totals vary by source, which is why AEMO's connection queue and the industry's forecast differ.
5. What does Australia actually get out of data centres?
More than 60 facilities already built or building in New South Wales, Australian data held under Australian law, and a way to sell power the transmission network cannot carry.
The New South Wales Government's 17 August 2026 release records investment growing at around 75 per cent a year on average over the three years to December 2025, more than 60 facilities operating or under construction, and 19 projects worth A$50.3 billion in the State Significant Development pipeline. The companion guidelines count "around 60", because the release counts facilities operating or under construction and the guidelines count only those already operating.
Amir Karton makes the sovereignty case and stops there. Selling compute rather than electricity is how Australia exports power it has no transmission to carry, on modelling that assumes it meets its renewable targets.
6. Who makes the money from Australian data centres?
Up to 65 per cent of the build cost buys offshore chips, and that is the tenant's bill. The operator's income is rent, and it stays here.
Andrew Cullen of the University of Melbourne answers "mainly overseas", counting the tenant's chip purchase as the operator's revenue. The tenants are the hyperscalers in Australia and the AI companies renting from them, and the chips on their books never appear on an operator's.
Cullen names the Australian owners and then sets them aside. On the completion position Infratil disclosed in February 2025, the Future Fund holds 34.55 per cent of Canberra Data Centres and the Commonwealth Superannuation Corporation 12.04 per cent, together 46.59 per cent of a business Infratil valued at a midpoint of A$18.5 billion in June 2026. NEXTDC and Macquarie Technology Group are ASX-listed and Australian-headquartered.
NVIDIA's margin on the chips is offshore and large, and Treasury has measured the import share of data centre spending. Much of the capital does leave, as a tenant's hardware bill.
7. How much of Sydney's water do data centres use?
Under 1 per cent now, and Sydney Water projects up to 25 per cent by 2035 if every proposal it has been asked about goes ahead.
Sydney Water produced 556.5 billion litres of drinking water in 2024-25, which is 1.53 billion a day. Western Sydney University's Ian Wright presents that yearly total as a daily one. His 139 billion litres for data centres is a quarter of the yearly figure, so it is a yearly number too, and it describes 2035 rather than now.
Data Centres Australia, the industry's peak body, told the New South Wales inquiry on 1 May 2026 that data centres use less than 1 per cent of Sydney's water, rising to 1.9 per cent by 2030. The argument is about 2035. Sydney Water's forecast, published by the Water Services Association of Australia in December 2025, runs from 90 billion litres a year at 15 to 20 per cent of supply up to the 25 per cent its managing director Darren Cleary defended at the 22 May 2026 hearing, where he also called forecast demand "Sydney Water's greatest risk factor in planning for data centre growth" and said the utility is "reliant on proponents' forecasts". That top figure counts service enquiries, and an enquiry draws no water until a building is connected.
The New South Wales data centre guidelines of 17 August 2026 expect any site using evaporative or open-loop cooling to run on recycled water, or to hold a clear agreement with its utility to get there. The guidelines are opt-in and buy a faster assessment, binding nobody. Melbourne's recycled-water project is becoming the default even so. IPART is reviewing who pays for the water infrastructure data centres need, with submissions closing 2 October 2026.
8. What happens to data centres if the AI bubble bursts?
The weak projects die and the buildings keep working. In Australia the grid connection queue sorts them.
Ehsan Noroozinejad, a Western Sydney University engineering researcher, answers this one without an error. Buildings, power connections, fibre and serviced land outlast any one generation of chips, and the dot-com build is the precedent: fibre laid on speculation in 2000 was still being lit a decade later.
Enquiries run ahead of applications, and applications ahead of committed connections, which is how a pipeline looks enormous while the approved but unbuilt share stays high. Speculative land positions cluster near full grid nodes for the same reason.
9. Are Australian data centres a military target?
Yes. One substation fault can take out the compute and the cable landing station together, and no Australian rule covers drones.
Frank den Hartog of the University of Canberra names drones, sabotage and offshore backup, and the threat is real. Power, subsea cable and compute sit close enough together that one attack reaches all three. Backup held offshore stays under Australian law only where the partner country's arrangements are strong.
On governance Australia is further along than he suggests. Facilities inside the critical infrastructure regime carry risk management duties, personnel security rules govern who can enter a hall, and operators have started appointing executives to own it, as NEXTDC did in 2026. No instrument requires a drone defence, and no programme funds one.
What to watch
Submissions to IPART's water pricing review close on 2 October 2026, and its recommendations will settle whether operators fund their own supply in New South Wales. The Legislative Council inquiry reports on 3 November 2026, a date its terms of reference moved on 5 August and much of the legal commentary still has as 30 September. Commonwealth legislation for the mandatory standards is flagged for early 2027. Sydney Water's next demand forecast separates enquiries from signed connections for the first time.