Australian data centre expansion raises policy and housing challenges

The New South Wales government is reviewing a $10 billion data centre project in the Hunter region near Muswellbrook. The plan includes a two‑gigawatt battery and would employ about 500 workers during construction and up to 200 for ongoing operations. NSW Treasurer Daniel Mookhey is overseeing the state’s data‑centre strategy, which involves extensive consultation on environmental, energy and water efficiency standards.

At the federal level, the Albanese administration has introduced a national framework that obliges large data‑centre operators to pay for grid connections, improve water use and provide local renewable generation. However, the Department of Agriculture, Fisheries and Forestry and the Department of Climate Change, Energy, the Environment and Water have not yet modelled the impact of the sector’s growth on agricultural land, water resources or food production, leaving a gap in environmental impact data.

The Housing Industry Association (HIA) has warned that the rapid expansion of data centres could compete with housing projects for land, electricity and water, potentially hampering efforts to deliver new homes. HIA chief Simon Croft urged governments to keep housing supply a priority alongside digital‑infrastructure development.