NSW Legislative Council inquiry into data centres: submissions close 27 March 2026
What you need to know
- In light of the unprecedent growth in and demand for data centres in Australia, the NSW Legislative Council has commenced an inquiry into data centres in NSW.
- The Public Accountability and Works committee will scrutinise whether NSW is equipped for the scale and pace of data centre development happening now and into the future.
- Key areas of focus for the inquiry include: the planning frameworks enabling data centre developments; electricity demands, grid impacts and impacts on emissions reduction targets; water usage; and impacts on the local environment and community.
What you need to do
- The inquiry is inviting submissions.
- Submissions can be made via the inquiry webpage and are open until 27 March 2026.
- Data centre proponents, developers, operators and other stakeholders should consider lodging a submission to ensure their views are before the inquiry.
The rapid roll out of data centres
Data centres have quickly become critical national infrastructure in Australia; supporting almost all economic activity and public services. In recent years, data centres have experienced unprecedented levels of demand fueled primarily by AI and machine-based learning, an increased reliance on cloud computing and the proliferation of 5G.
Such huge demand, which is being met by rapid growth, has prompted concerns amongst many as to the impact that data centres are having, or will have, on energy demand, electricity infrastructure, water usage and the environment and local communities.
This has prompted the NSW Legislative Council to establish an Upper House inquiry to inquire into and report on data centres in NSW. The Public Accountability and Works committee has been tasked with scrutinising whether NSW is adequately equipped for the scale and pace of data centre development occurring now and into the future.
Committee Chair, Ms Abigail Boyd MLC, described the situation as follows.
"Data centres over the last few years have expanded significantly, bringing with them an increased demand for energy and water, as well as concern about their environmental, social and economic impacts.
The NSW Government is encouraging more and more new data centre developments, and offering them fast-tracked planning assessments, without any plan for the social and environmental impacts.
This inquiry is about ensuring plans for data centre growth in NSW are guided by a coherent and integrated NSW Government strategy that takes into account the immediate and long-term impacts of data centres…".
The Committee's broad Terms of Reference
The Committee's self-referred Terms of Reference are broad and require consideration of the scale and predicted trajectory of data centre development in NSW, the planning framework enabling data centre development, and, importantly, the impacts of data centre developments including on energy demand, water, the environment, communities and land use.
More specifically, the Terms of Reference prescribe the following areas of focus for the inquiry.
Scale and trajectory of data centre development
The scale and trajectory of data centre developments, including geographical clustering and the preparedness of NSW planning, infrastructure and resources to cope with the projected growth.
The interaction between data centre development and other state economic, digital and industrial strategies.
The planning framework enabling data centre development
The classification of data centres as State Significant Development (SSD) based on power-consumption thresholds and the role of fast-track consenting mechanisms for such developments.
The adequacy of current planning processes to assess and address impacts at a cumulative and precinct level.
Electricity demand, grid impacts and implications on emission reduction targets
The potential impact of data centres on electricity networks, generation planning, transmission and distribution investment. Notably, the Terms of Reference explicitly mention cost recovery which suggests the Committee is considering infrastructure-related financial contributions.
The role of on-site back-up generators (including associated emissions and health impacts), and the alignment (or otherwise) of data centre development with NSW's emissions reduction targets and climate commitments.
Water usage
Current and projected water use and risks to water security. As with electricity demands, the Terms of Reference explicitly mention water usage related cost recovery and the possibility of allocating water-related infrastructure costs.
Local environmental and community impacts
Impacts on surrounding communities (including noise, air quality and heat, traffic and construction, land-use conflicts and amenity), and the distribution of those impacts across regions.
Land use and housing
The consequence of allocating industrial and services land to data centres and the impact this may have on housing supply and other strategic land uses.
The Commission must consider whether current planning frameworks appropriately balance data centres against competing social, environmental and economic needs.
Economic and distributional outcomes of data centre developments
The reality and distribution of the economic benefits (and costs) of data centre development and the nature of public subsidies available.
Governance, transparency and accountability
The adequacy of public reporting by data centres (eg on resource use, emissions and environmental performance).
From an approvals perspective, the transparency of approval processes including conditions, potential conflicts of interest or governance risks, and the impact of lobbying and donations on government policy setting.
Workforce considerations
Industry employment conditions as well as workforce development and upskilling and the role of labour standards, procurement and compliance in large-scale data centre projects.
Lessons from other jurisdictions
International and interstate approaches to managing data centre growth and the applicability of any alternative models to NSW.
What's next?
The Committee is currently inviting submissions. Submissions can be made via the inquiry webpage and are open until 27 March 2026.
Following submissions, hearings are expected to occur in May 2026.
The Committee's report is due by 30 September 2026.
The inquiry could mean significant implications for the data centre industry in NSW. The indication that specific infrastructure-related financial contributions may be considered will be of particular interest to data centre proponents. We encourage all data centre proponents, operators and other stakeholders to monitor the inquiry closely and consider lodging a submission to ensure their views are before the inquiry.
If you would like to know more about the inquiry, or would like assistance with making a submission, please contact us.
Want to know more?
- Data Centres – A modern digital asset class, 22 January 2026. Our article series outlines various key issues and considerations that impact the full lifecycle of data centres from planning, construction and real estate agreements through to regulatory, AI, data privacy, cyber and ESG considerations.
- Data centres – here today, here tomorrow: Water’s Evolving Role in Australia’s Data Centre Strategy, 8 December 2025 (podcast)
