The Business Council of Australia (BCA) represents Australia’s largest employers across all sectors, committed to building a stronger, more competitive, more productive Australia. We welcome the opportunity to respond to the NSW Legislative Council Public Accountability and Works Committee: Inquiry into Data Centres.
Data centres are a critical part of the digital infrastructure that sit behind much of modern life. Parents can book medical appointments online. Teams can collaborate across cities. Students can access digital learning. Businesses can reach customers through cloud platforms and digital tools. All this is possible because of data centres processing millions of calculations every second. They support everyday services such as banking and transport apps, telehealth, education platforms and emergency systems, along with business-to-business systems. Data centres enable so much of our everyday lives and boost the productivity of Australia’s businesses.
In simple terms, data centres keep the digital world running. Without them, everyday digital tools would slow down or disappear entirely.
While Australia needs data centres now, we also face a once in a generation opportunity. If we choose to be a data centre leader, Australia and NSW also gain:
- Increased GDP growth by capturing a larger share of the rapidly expanding global digital and AI economy
- Creation of high-value, long-term jobs across construction, engineering, operations and digital services
- Attraction of large-scale global investment, strengthening NSW and Australia’s position as a regional technology hub
- Acceleration of renewable energy generation and storage, with data centre demand underpinning new clean energy projects at scale
- Improved economy-wide productivity through faster, more reliable digital services and AI adoption across all sectors
- Strengthened infrastructure and resilience, including grid upgrades, connectivity, and more robust delivery of critical services such as healthcare, finance and government systems.
Data centres should be understood as critical infrastructure, and like traditional infrastructure, they underpin the productivity of the economy. Hospitals use them to access patient records and diagnostics. Small businesses rely on them for accounting systems and online stores. Governments rely on them to deliver services such as transport and welfare systems.
As with any major infrastructure or project, planning and regulatory requirements apply. Data centres require electricity, water, land and network capacity, so development should be carefully considered.
Industry is already addressing many of these challenges. Data centre operators are building renewable energy generation and storage, more efficient cooling technologies and infrastructure that strengthens water systems. Data centre investment helps finance new renewable energy generation and grid upgrades that benefit other users.
The global data centre market is growing quickly. Worldwide data centre capital expenditure may exceed US$1 trillion each year by 2029 as AI and digital services expand. Earlier phases of the industry focused on flexibility and choice. Today the focus is speed, with operators competing to deliver new capacity quickly.
And Australia is an increasingly attractive destination for digital infrastructure investment, supported by our renewable energy, strong connectivity, available land, stable political environment and a growing technology sector. Yet our position cannot be assumed to continue.
Competition across the Asia-Pacific region is intense. Singapore, Japan, Malaysia and other markets are also attracting investment, and NSW sits in the middle of this competition.
Governments need to recognise data centres as enabling infrastructure and act accordingly. For this reason, we broadly support the Federal Government’s release of Expectations of data centres and AI infrastructure developers. Data centres are already meeting or exceeding these expectations. The NSW Government’s release of a public consultation paper on competing principles works to muddy the waters for investment in Australia, and should carefully consider how it aligns or not with the national expectations.
The central policy question is clear. How can Australia capture the economic value created by data centres while managing the infrastructure systems that support them? The answer begins with recognising what data centres really are: the foundation of the services Australians rely on every day.
Key recommendations
Recommendation 1
Recognise data centres as a strategic economic opportunity for NSW and recalibrate policy settings, regulatory approaches and community narratives to enable and attract investment at scale
Recommendation 2
The NSW approach to data centres should align with the Commonwealth Government’s Expectations of data centres and AI infrastructure developers to create a national and consistent approach so Australia can compete for investment and streamline national data centre operations.
Recommendation 3
The NSW Government should give the new Investment Delivery Authority the ability to rapidly assess and recommend public infrastructure investments that support major private sector projects.
Recommendation 4
Acknowledging recent positive reforms to NSW’s planning system, the NSW Government should monitor reforms to ensure they deliver better performance, focusing on efficiency, consistency, and certainty in the planning system.