What the tech industry is not telling your community about water, power, privacy and the public interest
A boom built on public resources
Australia has become one of the world’s most attractive destinations for data centre investment. In 2024 alone, investment in Australian data centres surged past $13 billion — a staggering increase of more than 25,000 per cent compared with the previous year. Corporations including Amazon, Microsoft, Google and Blackstone’s AirTrunk are racing to build massive facilities across Sydney, Melbourne and beyond. Prime Minister Albanese has publicly welcomed the investment.
What is not making the headlines is who bears the cost.
These facilities are not being built on their own resources. They are being built on yours — your water, your electricity grid and your privacy. And the planning frameworks governing their approval have not kept pace with the scale of what is being approved.
Water: a public resource handed to private industry
The water demands of data centres are extraordinary, and they are growing faster than governments are willing to regulate.
Sydney Water estimates that by 2035, data centres in Sydney alone will need up to 250 megalitres of water daily — more than Canberra’s entire drinking water supply.
New South Wales authorities approved construction of data centres without requiring measurable plans to cut water use, raising concerns that the sector’s rapid growth will leave residents competing for the resource. The NSW state government green-lit all 10 data centre applications it ruled on since expanding its planning powers in 2021, from operators including Microsoft, Amazon and Blackstone’s AirTrunk.
Data centres could account for up to a quarter of Sydney’s available water by 2035, according to Sydney Water projections. Sydney’s drinking water is limited to one dam and a desalination plant, making supply increasingly tight as the population grows and temperatures rise. In 2019, its 5.3 million residents were banned from watering gardens or washing cars during drought and bushfires.
Ian Wright, a former Sydney Water scientist now at Western Sydney University, has been direct: “There is already a shortfall between supply and demand.” As more data centres are built, “their growing thirst in drought times will be very problematic.”
In Melbourne’s west, the situation mirrors Sydney’s. Greater Western Water was assessing almost three times as many applications as previously, with 19 water applications representing a total of up to 20 million cubic metres of water per year underway for approval — the same annual consumption as 330,000 Melburnians used in the 2024 financial year.
Less than one per cent of the Earth’s freshwater is easily accessible. Using high-quality drinking water for industrial cooling is no longer sustainable. Yet that is precisely what is happening, at scale, with government approval.
Electricity: who pays for the grid upgrades?
The electricity demands are equally significant, and the question of who pays for the resulting infrastructure is unresolved.
In the financial year 2025, Australian data centres consumed an estimated 3.9 terawatt-hours of electricity. Under the AEMO Step Change scenario, data centre consumption is forecast to grow at an average annual rate of 25.1 per cent, reaching 12 terawatt-hours by 2030 and 34.5 terawatt-hours by 2050.
In New South Wales, data centres currently account for 4 per cent of the state’s grid-supplied electricity. That share is expected to rise to 11 per cent by 2030. The NSW Government had approved or received development applications for 22 additional data centre facilities with a combined capacity of 3.67 gigawatts — roughly equivalent to the electricity needed to power more than 3 million households for a year.
The critical question is who funds the grid upgrades this growth demands. In Australia’s National Electricity Market today, electricity network costs make up almost half of household electricity bills, and these costs are rising. The rapid growth of new data centres has driven increases in peak electricity demand, requiring network upgrades, contributing to these cost increases. Major electricity users like factories and paper mills usually pay upfront to connect to the grid — but how data centre connections are categorised by the Australian Energy Regulator affects whether everyday consumers end up shouldering those costs.
Ireland provides an instructive warning. By 2030, 30 per cent of Ireland’s electricity demand is expected to come from data centres, “placing upward pressure on electricity prices” due to the need to purchase additional generation capacity. Australia is accelerating in the same direction.
Privacy: your data, their infrastructure
As data centres multiply, so does the concentration of Australians’ personal information within facilities that are, in many cases, owned or controlled by foreign corporations subject to foreign law.
Only 22 per cent of Chief Information Officers feel fully confident their cloud providers demonstrate compliance across all data sovereignty categories, according to PwC Australia research. The risk is not theoretical. Data stored in facilities with international ownership structures can be subject to the laws of other jurisdictions — including laws that permit access by foreign governments or agencies without the knowledge or consent of the Australian men and women whose data is held.
Australia did strengthen its privacy framework late in 2024. On 10 December 2024, reforms to Australia’s Privacy Act were passed, including expanded enforcement capabilities for the Office of the Australian Information Commissioner and the introduction of a new statutory tort allowing Australians to sue for serious invasions of privacy. A new statutory tort for serious invasions of privacy came into effect on 10 June 2025, allowing Australians to recover damages or obtain an injunction against organisations that intentionally or recklessly invade their privacy.
These reforms are welcome. But they do not resolve the underlying question of where data physically resides and under whose legal authority it ultimately falls.
Planning frameworks: fast-tracked for industry, not communities
The pattern across NSW and Victoria is consistent: government planning bodies are fast-tracking approvals for major corporations while communities receive little to no opportunity to scrutinise water, energy or amenity impacts before decisions are made.
Hume City Council, for example, lacks oversight and transparency regarding the environmental impact of data centres approved in its area.
Technology companies are pledging “water positive” goals — returning more water to the environment than they consume — but the pace of AI adoption risks outstripping these commitments. Approval documents reviewed by Reuters found that the most ambitious commitment to cut reliance on town water, across all approved facilities, was 15 per cent — for one of two data centres approved on Amazon’s land.
These are not conditions. They are aspirations.
What communities can do
The growth of data centres in Australia is not inherently wrong. What is wrong is the absence of genuine accountability to the communities that bear the costs.
Men and women living near proposed facilities — and those affected by rising electricity bills and water competition — have standing to:
- Make formal submissions to state planning authorities on any development application;
- Demand that water impact assessments be independently verified before approvals are granted;
- Request their local council formally oppose any categorisation of data centre grid connections that shifts infrastructure costs to residential consumers;
- Contact their federal and state MPs to support stronger data sovereignty laws that ensure Australians’ data is held under Australian law, in Australian facilities with enforceable standards.
The planning laws exist. The privacy laws are being strengthened. What is needed is the will to use them — and communities informed enough to demand that they are.
“Quis custodiet ipsos custodes?” — Who will guard the guardians themselves?
Sources: Sydney Water / IPART (2025); Reuters (September 2025); AEMO / Oxford Economics Australia (July 2025); Energy Consumers Australia; Water Diplomat (2025); Sphere Infrastructure (January 2026); Privacy and Other Legislation Amendment Act 2024 (Cth); PwC Australia Digital Trust Report (2025).
Last Updated 4 months ago
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