New South Wales inquiry finds data centre approval gaps but rejects a moratorium

A New South Wales inquiry reported on 5 November that data centre approvals in the Australian state had failed to account for their combined demands on resources and infrastructure. The cross-party Public Accountability and Works Committee recommended a state strategy and better coordination of approvals, but declined to call for a halt to new projects, Reuters reported.

New South Wales assessed projects individually

The inquiry examined planning decisions in New South Wales, whose capital is Sydney. Its finding concerns what happens when separate applications draw on the same electricity supply, water resources and other infrastructure. The report said the state lacked a coherent strategy for managing those demands as data centre development expands. It described a planning framework that considers facilities chiefly one at a time, although their effects can accumulate across communities and industries.

The report also warned that existing guidelines may put future electricity demand too low and fail to account adequately for limits on water supply. Facilities grouped in the same area could place additional pressure on infrastructure. Those concerns reach beyond the merits of any single application: a project can be assessed on its own terms while adding to demands already created by others nearby.

The committee’s proposed response was a comprehensive data centre strategy and better coordination among those involved in the approvals pipeline. That would address how decisions are made across projects rather than stop applications from proceeding. The distinction matters for developers seeking permission and for communities facing several projects: the committee identified a problem with combined impacts, then chose to recommend a change to planning practice rather than an immediate pause.

Committee voted 6-1 against moratorium proposals

Minutes attached to the inquiry report recorded a 6-1 vote to remove recommendations for both state and national moratoriums on data centre approvals. The proposed pauses would have lasted until social and environmental harms could be fully understood. Committee chair Abigail Boyd, a Greens member of the state’s upper house, cast the sole vote to keep the recommendations. The published outcome therefore differs from the position Boyd argued for in the report’s foreword.

Boyd described the pace of AI-related data centre development as an “AI-fuelled data centre frenzy” and warned that the facilities threatened to use very large quantities of energy and water. She also argued that governments had been drawn to the prospect of economic gains that would not justify the costs. Those are the chair’s objections to proceeding without a pause, not a moratorium adopted by the committee.

The disagreement gives the committee’s recommendation its practical force. Its members accepted findings about cumulative pressure but, by the recorded vote, rejected a condition that would have stopped approvals while the harms were examined. The recommendation instead puts the work of developing a state strategy alongside an approvals process that remains open.

NextDC and OpenAI await approval

Developer NextDC and OpenAI are awaiting approval for a data centre in New South Wales. Their application sits within a broader set of proposed developments in the state. AI Affairs has also reported that Anthropic was in advanced talks to anchor AirTrunk’s 540MW Kurri Kurri data centre. That proposed arrangement is distinct from the NextDC and OpenAI project.

Local opposition is already part of the approvals setting. Residents in one New South Wales suburb prompted the withdrawal of a smaller data centre project. Their intervention produced a result on that proposal, while the inquiry considered how the state should assess pressures shared across multiple proposals. New South Wales has a state election scheduled for March 2027.