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.
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.
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.
Lane Cove Council’s Response to Parliamentary Enquiry
Lane Cove Council has prepared a draft response to be submitted to the Parliamentary Enquiry.
Lane Cove Council is of the view that Data Centres should not be a State Significant Development and that local councils should review and approve data centre development applications.
The response notes:
Council recommends the following to the Inquiry:
” a) that applicants be required to engage with the Local Council when they are developing their design and that prior to the submission of the development application it is to be considered by the Council’s Design Review Panel.
b) that the applicant carry out a formal community engagement process including a public meeting in consultation with the Local Council prior to the submission of any Development Application, the results of which should be reflected in the design of the centre and documented in the Statement of Environmental Effects.
c) mandate that the applicant provide an element of Public Benefit to be negotiated and agreed with the Local Council prior to any determination of the development application.
d) require applicants to address the issue of the loss of employment lands due to the location of any Centre that reduces the potential for employment.
e) require any application for a data centre to address the resource use in particular water and electricity.
f) the storage of large amounts of fuel {diesel} be declared and the potential hazards identified and procedures to protect the local community from any such hazards.
g) that all local environmental factors being adequately addressed by the applicant – tree loss, bushland, view impacts, stormwater and noise.”
Council’s Response Fails to Address Noise and Air Quality Issues and Lack of Rainwater Harvesting and On-Site Solar
Public Benefit
Lane Cove Council notes that a public benefit should be negotiated. This needs to be expanded upon, and the concept of community benefit agreements should be noted. These agreements could allow the establishment of community funds that the council can use for high-priority projects outside of data centres.  We have already seen the impact with the data centre in Lane Cove with cabling companies ripping up footpaths and Interflow taking months to complete work to provide more water to Airtrunk.
Noise
Data Centres are noisy.
Sound is considered in any NSW data centre planning process. This is primarily measured in dB(A) and frequency; the former measures decibels perceived by the human ear, and the latter is how pitch and sound waves affect the mind and body.
In Lane Cove, there’s one current, one approved, and one proposed hyperscale data centre within 600 metres of each other in the Lane Cove West Business Park. Airtrunk’s SYD2 on 1 Sirius Road, the soon-to-be-built SYD1 on Apollo Place and the Goodman facility, currently under assessment by Planning NSW at 12 Mars Road.
Both AirTrunk and Goodman facilities are surrounded by businesses, a childcare centre, and residential areas, with decibel levels high enough to potentially affect locals in some of these areas.
Although data centres are not permitted in residential areas, homes sit just over 100 metres from the proposed Goodman Facility.
Lane Cove Council should address in their submission the need for a distance separation from land zoned residential and setback requirements for generators and HVAC.
In the United States, data centre clusters have formed in several states, such as Virginia, and some local counties, such as Fairfax, have tackled noise issues head-on. Under local regulations, data centre buildings must be at least 200 feet from residential areas or properties. Equipment such as back-up generators must be 300 feet from residential property or separated from the lot line of a residential district or residential property by the data centre building.
Air Quality
Data Centres rely on diesel generators to kick in during power blackouts or when their lithium battery supply has been depleted. These diesel generators are also tested regularly. There is no specific state or local government oversight of the air quality when diesel generators are being used. The Goodman data centre will be located not far from Lane Cove West School, and if the wind is blowing in that direction, it may cause issues for children with breathing problems.  As mentioned above, a community agreement should be signed, which could include a local protocol and a notification system in case the backup generators turn on.
Water Issues
You may have read that Data Centres consume a significant amount of water, and in our article here, we note that they currently use only drinkable water. There are no regulations that require on-site water harvesting.
Solar
Data centres use a significant amount of electricity. While some energy-efficiency and emissions reporting frameworks apply, there are currently no NSW regulations requiring data centres to install on-site solar generation.
Look at Overseas Regulations
Lane Cove Council should request that the parliamentary enquiry examine regulations introduced overseas, such as in Phoenix, where a Special Permit process addresses potential health and safety impacts. These impacts include, but are not limited to, power grid reliability, fire risk, emergency response access, and noise impacts.
In particular, at Lane Cove West Business Park, there is only one way in and one way out, which creates issues for emergency vehicles.
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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