Data Centres Won't Fix What Australia Broke

There is something deeply uncomfortable about Australia's sudden enthusiasm for data centres.

Not because Australia doesn't need them. We do.

Our government, financial system, hospitals, defence forces, researchers and businesses all depend on secure digital infrastructure. Artificial intelligence will only increase that need.

But that isn't the whole story.

Australia isn't simply building the data centres Australians need.

We are positioning ourselves to become a regional hub for the global AI industry — offering the land, electricity, water, infrastructure and political stability required by some of the largest technology companies in the world.

And perhaps we should ask why that proposition has become so attractive, so quickly.

Because Australia has another problem.

For much of our modern history, Australia enjoyed one of the highest standards of living in the world. We remain an extraordinarily wealthy and resource-rich country, yet our relative economic position has steadily eroded. Manufacturing has disappeared. Productivity growth has weakened. Housing has become increasingly unaffordable. Energy has become more expensive despite our extraordinary natural resources. Governments increasingly point to population growth and enormous infrastructure projects as evidence of economic success while households struggle to recognise that prosperity in their own lives.

Now another boom has arrived.

Artificial intelligence.

And Australia wants a piece of it.

The new oil rush

Friendlyjordies recently described data centres as the "new oil".

We think he's onto something.

Where we differ is in how comfortable we should be about what that means.

The global AI race requires extraordinary amounts of computing power. Computing power requires data centres. And the new generation of AI data centres requires something Australia has in abundance: land and the potential to produce enormous quantities of energy.

Suddenly the weaknesses in Australia's economic model can be repackaged as an opportunity.

We may no longer manufacture much of what the world buys.

We may not own the world's dominant technology platforms.

We may not develop the leading AI models.

But we have land.

We can build electricity generation.

We can build transmission.

We can supply water.

And we can host the machines.

That may generate enormous investment, but investment and prosperity are not necessarily the same thing.

Data centres and renewables need each other

There is another part of this story that deserves much more attention.

Australia is simultaneously attempting an enormous transformation of its electricity system.

That requires staggering investment in renewable generation, transmission, storage and supporting infrastructure.

And then, almost perfectly, along comes an industry capable of consuming electricity on an extraordinary scale.

Data centres need power.

Renewable developers need customers.

Transmission projects need justification.

Governments need investment.

The AI boom potentially brings all of those interests together.

That doesn't make the strategy inherently wrong.

In fact, from the perspective of a government trying to stimulate investment and economic activity while underwriting an enormous energy transition, it may look extraordinarily attractive.

But that's precisely why scrutiny matters.

When an economic strategy solves several political and investment problems at once, governments have a powerful incentive to emphasise its benefits and minimise its costs.

And data centres have very real costs.

They require electricity, water, land and network infrastructure. They can require substantial backup generation. Their construction and operation can impose costs on surrounding communities. Governments are also actively facilitating the sector through investment policy, planning processes and tax concessions. Where public infrastructure or public support is involved, taxpayers are entitled to know what they are contributing and what they are receiving in return.

At sufficient scale, data centres can also influence electricity generation and transmission investment decisions that affect the wider economy.

These aren't reasons to reject data centres.

They are reasons to ask what Australia is receiving in return.

We've done this before

Australia has spent generations supplying the world with enormously valuable resources.

The problem was never that mining and gas booms occurred.

Quite the opposite.

Australia was extraordinarily fortunate to have them.

The scandal is that a country blessed with such immense mineral and energy wealth did not convert those booms into far greater and more enduring prosperity for Australians.

Those resources created enormous wealth. The more difficult question is how much of that wealth was captured for the long-term national benefit, how much productive capability was built around it, and how much Australians have retained.

Now we risk repeating the same mistake in a new industry.

This time the commodity isn't sitting underground.

It is our electricity, water, land, infrastructure and strategic location.

Foreign-owned companies can invest billions of dollars in facilities located in Australia without those facilities becoming meaningfully Australian.

The contractors may be multinational.

The equipment and technology may be imported.

The owners may be foreign.

The customers may be international.

The intellectual property may sit overseas.

The profits may ultimately flow offshore.

And the most valuable parts of the AI economy — the models, platforms, algorithms and technology companies themselves — may remain firmly in foreign hands.

Meanwhile, Australians provide the resources and the physical place in which it all operates.

That is not necessarily a good deal simply because the investment figure has a lot of zeroes attached.

So we need to ask:

Who owns the infrastructure?

Who builds it?

Who owns the technology?

Who owns the intellectual property?

Who owns the AI models?

Where do the profits ultimately flow?

Who receives the computing capacity?

How much Australian industry is actually participating in the supply chain?

And once construction finishes, how many Australians are actually employed?

These questions matter enormously if data centres are being presented as part of Australia's next economic chapter.

Investment isn't the same as national benefit

This is one of the central arguments in our data centre briefing paper.

Announcing billions of dollars of investment tells us how much money is being spent.

It does not tell us how much enduring value Australia retains.

And we are already seeing why that distinction matters.

In the March quarter of 2026, the Australian Bureau of Statistics reported that investment in data centre machinery and equipment was the largest contributor to growth from business investment. That sounds like an extraordinary economic success story.

But there was another part to the story.

The ABS also reported that the majority of those capital assets were imported, which meant the contribution to GDP growth was partly offset by the resulting increase in imports.

There, in a single set of national accounts, is the problem Australia needs to confront.

Investment occurring in Australia is not the same thing as value being created and retained in Australia.

A project can generate enormous capital expenditure and thousands of construction jobs while still producing relatively modest permanent employment.

Foreign investment can be beneficial while much of the eventual ownership and profit remains offshore.

A data centre can represent billions of dollars of investment while much of its sophisticated equipment is manufactured somewhere else.

Renewable electricity can power a data centre while still carrying an opportunity cost: that electricity cannot simultaneously power another industry.

None of this means the investment should automatically be rejected.

It means we should stop treating the size of the investment announcement as evidence that the national interest has been satisfied.

The better question is:

What will Australians have in twenty years because we allowed this project to consume Australian resources today?

A wealthy country looking for another boom

That is what troubles me most about the data centre rush.

Australia should not need rescuing.

We are an extraordinarily wealthy country.

We have energy resources, minerals, agricultural land, world-class universities, political stability, an educated population and proximity to some of the fastest-growing economies in the world.

Australia has already experienced extraordinary resource booms.

Mining and gas should have provided the foundations for lasting national prosperity: lower structural costs, productive infrastructure, sovereign wealth, advanced industries and an economy capable of turning our natural advantages into higher-value Australian products and businesses.

The failure was not that Australia had those booms.

The failure was not capitalising on them sufficiently for Australians.

There is a broader question here too.

Australia increasingly measures economic success through capital flowing in: foreign investment, major projects, population growth and headline GDP. But those measures can conceal what is happening underneath.

Is Australia replacing established domestic wealth, businesses and taxpayers with increasingly mobile international capital — and does government policy treat those two things as economically interchangeable?

They are not.

Capital arriving in Australia can unquestionably benefit the country. But an economy that attracts billions in foreign investment while losing locally accumulated wealth, businesses, productive capability or long-established taxpayers has not necessarily become wealthier in any meaningful national sense.

The same principle applies to data centres.

The fact that billions of dollars are being invested here tells us remarkably little about how much of the resulting wealth, ownership, capability and economic value Australians will ultimately retain.

And now, instead of asking why a resource-rich nation finds itself struggling with productivity, declining living standards, expensive energy, housing pressures and weak economic complexity, we appear to be looking towards the next enormous investment wave.

Property and population growth have already been relied upon to keep economic activity moving.

Renewables are attracting another vast wave of capital and infrastructure spending.

And now AI infrastructure has arrived.

Perhaps data centres really will become the new oil.

Perhaps billions of dollars of global capital will pour into Australia.

Perhaps our renewable electricity build-out will make this country one of the most attractive locations in the world for AI infrastructure.

But if that happens, we should not confuse hosting the infrastructure of the next industrial revolution with leading it.

There is a profound difference between becoming an AI nation and becoming the place where other nations' AI runs.

Australia First

This is why our position has never been that Australia should stop building data centres.

Australia needs data centres.

The question is what we build, how much we build, who we build it for, who owns it and what Australians receive in return.

If an international data centre consumes enormous quantities of Australian electricity and water, occupies valuable land and requires publicly enabled infrastructure, then the national return should be equally substantial.

Australian jobs.

Australian businesses in the supply chain.

Australian research.

Australian intellectual property.

Australian compute access.

Australian tax revenue.

Australian ownership and investment.

And measurable, enduring Australian capability.

But the test cannot stop at economic returns.

Australians should not be expected to surrender their own quality of life to make the strategy work.

Communities should not lose reliable access to water.

Households and existing industries should not be pushed behind enormous new electricity users.

People should not be expected to accept unreasonable noise, emissions or environmental impacts because a project has been labelled strategically important.

And taxpayers should not continually be asked to fund the infrastructure or public support required to attract global corporations while being told that the sheer size of the investment proves the benefit.

If the benefits exist, demonstrate them.

If the costs are justified, demonstrate that too.

And if public resources are being committed, Australians should be able to see precisely what they are getting in return.

Because the greatest risk isn't that Australia's data centre boom fails.

It may be that it succeeds spectacularly — billions invested, gigawatts constructed, renewable generation expanded, international technology companies pouring into the country — while Australians eventually discover that we once again supplied the resources while somebody else captured the higher-value economy built on top of them.

Australia does not need to stumble from boom to boom hoping the next one will fix what the last decades of economic policy failed to address.

It needs an economic strategy.

And if data centres are going to be part of that strategy, they should be built on Australia's terms — for Australia's benefit.

This is a SUNA opinion piece. It draws on research undertaken for our Data Centres briefing paper, together with publicly available government and economic data. It reflects our analysis of Australia's emerging data centre strategy and the questions we believe Australians should be asking about its long-term national benefit.