Updated 1 February 2026.
A New South Wales parliamentary inquiry is underway to examine the rapid expansion of data centres across NSW, including their planning approvals, infrastructure requirements, and environmental impacts.
The NSW Legislative Council’s Public Accountability and Works Committee will review whether New South Wales is adequately prepared for the scale and pace of data centre development now occurring, particularly in areas experiencing clustering of facilities like the Lower North Shore and Western Sydney.
This inquiry follows community concern about the concentration of data centres in certain suburbs and their proximity to residential areas.
Data Centre developers and hyperscalers are aware of community concerns, and in Australia, they recently formed Data Centres Australia. It is the peak representative body dedicated to data centres in Australia, with one of its aims being to work with government and stakeholders to raise awareness and advance coordinated policy action.
Overseas, a public relations campaign is in full swing.
The New York Times recently published an article titled “Meta Campaigns to Change Opinions on Data Centres.” The New York Times says the tech giant has spent more than $6 million on TV ads in state capitals and Washington, with the message that data centres create jobs. Read the article here (it is paywalled).
What is the Public Accountability and Works Committee?
The Public Accountability and Works Committee (“the Committee”) was established on 10 May 2023.
The committee was established to inquire into and report on:
- the public accountability, financial management, regulatory impact and service delivery of New South Wales government departments, statutory bodies or corporations, and
- all public works to be executed (including works that are continuations, completions, repairs, reconstructions, extensions, or new works) where the estimated cost of completing such works exceeds $10 million.
The Members of the Commitee are:
- Ms Abigail Boyd MLC (The Greens) – Chair
- Hon Scott Farlow MLC (Liberal Party) – Deputy Chair
- Hon Mark Buttigieg MLC (Australian Labor Party)
- Hon Dr Sarah Kaine MLC (Australian Labor Party)
- Hon Mark Latham MLC (Independent)
- Hon Sarah Mitchell MLC (The Nationals)
- Hon Peter Primrose MLC (Australian Labor Party)
Why is the Committee Looking Into Data Centres?
Data Centres are essential to the digital economy; however thier rapid growth has raised concerns about:
- significant and continuous electricity demand and grid impacts
- water consumption, including potable water use
- reliance on diesel generator backups
- land use conflicts with housing supply and employment-generating industries
- cumulative environmental and amenity impacts on nearby communities
- transparency and accountability in fast-tracked planning approvals.
What Are the Terms of Reference?
Under its Terms of Reference, the committee will examine:
- The current and projected scale and geographic clustering of data centres in NSW
- whether planning frameworks adequately address cumulative and precinct-level impacts
- electricity demand, emissions and alignment with NSW climate commitments
- water use, cooling systems and risks to water security, particularly during drought
- environmental and community impacts such as noise, traffic, heat and amenity
- impacts on land availability and housing supply
- The economic benefits of data centres and how costs and benefits are distributed
- governance, transparency, lobbying and potential conflicts of interest
- workforce conditions, skills and training
- lessons from other Australian and international jurisdictions.
You can read the full terms of reference here.
The Chair of the Committee, Abigail Boyd said:
“Every jurisdiction facing runaway data-centre growth has learned the same lesson the hard way: when governments allow development to race ahead without an integrated strategy, the public ends up paying the price.
“The NSW Government is encouraging more and more new data centre developments, and offering them fast-tracked planning assessments, without any plan for the social and environmental impacts. It doesn’t have to be like this – the public should be the ones to determine whether this is the right course of action for our state, not the tech bros and their investment priorities.
“My fear is that governments of all persuasions have been suckered in by a slick get rich quick scheme touted by big tech. And data centres suit the needs of governments perfectly – a supposed solution to economic preoccupations around productivity and growth, and a big new development to cut a ribbon on. I think we need to seriously interrogate those assumptions, and decide for ourselves whether the environmental and climate implications are costs the public are willing to bear.
“In response to questions I submitted, the NSW Department of Climate Change, Energy, the Environment and Water confirmed they had provided formal advice to the Minister that uncontrolled data centre growth could jeopardise NSW’s legislated 2035 emissions target.
“While big tech is promising us the moon, it could end up costing us the earth. That’s why we’ve established this inquiry.”
The NSW Coalition released a statement on the nation’s first parliamentary inquiry into data centres, saying the inquiry must be grounded in a clear understanding of the extraordinary economic and social opportunities presented by artificial intelligence and the critical infrastructure required to power it.
NSW Shadow Minister for Energy and Climate Change, Artificial Intelligence, Digital and Investment, James Griffin, said concerns about water use, energy demands and environmental impacts are real and must be managed, but the inquiry should not be used as a pretext to discourage investment in the digital infrastructure that will power the next generation of jobs and productivity growth.
“Artificial intelligence will define economic growth, productivity and public service delivery for the next generation,” Mr Griffin said.
“Data centres are not optional, they are essential infrastructure if NSW wants to lead, not follow.”
“If NSW sends a signal that it is uncomfortable with building the infrastructure needed for AI, global capital will simply go elsewhere,” Mr Griffin said.
Shadow Minister for the Environment, Jacqui Munro said, “What we know is that the government is struggling to get the settings right on critical digital infrastructure. It is jeopardising our chance to have an honest and ambitious public conversation about how we lock in prosperity.”
“This inquiry is our chance to have a much-needed public conversation on AI, resources and the public good, where the government has failed to lead.”
The Coalition believes the work of this inquiry should be framed around a simple question: how do we maximise the benefits of AI for all of NSW, while managing impacts sensibly and transparently?
Timeline
Submissions close 27 March 2026 – if you would like to make a submission click here
The committee is due to report by 30 September 2026.
In the Cove Investigation into Data Centres Clusters
In the Cove has been reporting on the emergence of data centre clusters in Lane Cove and neighbouring suburbs. We are publishing four articles, focusing on water, noise, planning, and energy. We have published our water article here and our noise issues article here.
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