Australian Government to Impose Water, Power Standards on AI Data Centres Amid Growing Community Backlash
New AI data centres in Australia will be forced to minimise water and underwrite power under proposed standards, as the government creates an AI office. This follows rising resentment from communities near expanding datacentres over noise, emissions and fast-tracked approvals.
New artificial intelligence data centres will be forced to underwrite or supply their own power and minimise water use under new AI standards to be introduced to parliament, Prime Minister Anthony Albanese announced. The government will also create an Office of AI within his department to oversee the design of the standards. The approach will be considered by the national cabinet in August, with standards expected to be legislated early next year.
Greenpeace Australia Pacific joined the Greens in calling for an immediate pause on all AI data centre development until binding rules are in place. A Greenpeace spokesperson said urgent regulations are needed for data centres already being built, and a moratorium on approvals should be implemented to protect communities, climate and the environment. The Greens similarly demanded an indefinite pause, arguing that without proper rules, big tech companies will take Australia’s resources “and leave Australians with nothing to show for it.”
The Australian Council of Trade Unions welcomed the government’s intervention, praising the stance against the theft of creative works and the refusal to give big tech an exemption from paying for copyrighted content. The union movement insisted it does not seek to veto technology but to “veto the harm it could cause,” noting that Australians do not trust AI because benefits for workers remain unclear.
The Climate Council urged the government to tie new data centre developments to additional renewable energy to prevent power price hikes and climate pollution. Independent MP Kate Chaney argued the government’s focus on physical infrastructure still lags behind broader risks such as taxation of AI companies and deepfakes.
The announcement comes as resentment grows against massive datacentres sprouting across the country. In West Footscray, near Melbourne, a resident described the constant construction noise, background hum, and diesel exhaust from a nearby M3 datacentre that is set to double in size to cover 10 hectares and draw 225MW of power by the end of 2027, should fast-track planning approval be granted. The site’s diesel generators are reportedly expanding from 40 to 100. The CEO of NextDC previously called the speed and scale of expansion “stunning.”
Near Sydney, a proposal for a 90MW datacentre named Project Mars has drawn opposition due to its size and proximity to bushland and residential zones. The local council argues the three-storey, 22,000 sqm centre exceeds height limits and would be visually intrusive next to a popular park used by half the suburb each weekend. Residents fear the “cluster” of datacentres in the area and their cumulative power draw. In Hazelmere, east of Perth, community opposition is growing against a planned 15,000 sqm, 120MW datacentre, with one resident comparing it to a warehouse bigger than a Bunnings.
A spokesperson for NextDC said the M3 project complies with local and state processes and that feedback mechanisms are in place. The Victorian planning minister’s office said the expansion proposal is under consideration. The NSW planning minister said a full merit-based assessment, including energy needs, will be conducted before any decision, and the public is encouraged to have a say during consultation.