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Rapid demand for AI datacentres in Australia could stoke inflation, experts warn – and crowd out land for housing

Calls are growing for new datacentre approvals to be halted until stronger protections are considered Get our breaking news email , free app or daily news podcast T ransport for NSW and the Reserve Bank have warned datacentres could take scarce land from logistics firms and housing developments, pushing up prices and overheating the economy, as calls grow for a national pause on the booming sector. The rapid growth of datacentres has raised concerns for the transport and logistics sector, with Transport for NSW telling the state parliament inquiry on datacentres there was already significant pressure on the availability of industrial land and infrastructure. The transport department agency said in a submission that freight and logistics companies depended on industrial land near markets and transport. “The shortage of land is causing major freight and logistics operators to leave Sydney . They are relocating their main centres to Brisbane or Melbourne where suitable land is available and less expensive,” it said. Transport for NSW acknowledged the industrial land vacancy rate had improved nationally and in Sydney in the past few years, but it was still “well behind international rates and below the ideal market level”. “The increasing demand on freight, from both increasing population and changing consumer patterns, will continue to drive the need for more industrial land for high volume logistics handling, and localised distribution centres across Sydney,” a spokesperson said. Transport for NSW warned that fragmentation of freight activities due to competing land uses could result in increased costs for business and higher prices for consumers, and said government needed coordinated policy to manage land use strategically. Commercial and industrial building approval values hit a record high in May because of new datacentre projects, the Australian Bureau of Statistics reported on Wednesday. The board discussed the risk the buildout could make skills shortages worse – construction costs were already high and workers in short supply before datacentre builds began hiring. Three communities in NSW, Victoria and Western Australia that Guardian Australia has previously reported on have allied to call on state and federal governments to halt approval of new datacentre developments until stronger protections for communities, cultural heritage and the environment are considered. The federal Labor backbencher Ed Husic also raised concerns about datacentres taking up land that might otherwise be used for housing. “There’s been a bit of a frenzy going on with datacentre builds … Land gets snapped up that should have been set aside for houses, and we’ve already got 90,000 workers short in construction,” he told Sky News on Tuesday. “So if we are having a situation where datacentres are now taking up land for homes, we’ve got to pump the brakes on this.” The assistant minister for the digital economy, Andrew Charlton, said the government’s top priority was building new homes. “States and councils need to prioritise housing in their local planning decisions,” he said. “The collective task of policymakers is to ensure investment in datacentres work in the interests of Australians, not the other way around.” Dennett said communities deserved a genuine say in what got built around them but a moratorium was the wrong tool. “Datacentres in Australia are already assessed through rigorous, independent planning that requires environmental assessment, community consultation, cultural heritage protection and binding conditions of approval, and they can only be built on industrial and employment land,” she said. “A blanket pause would freeze the whole industry to legislate safeguards that for the most part already exist, while sending the investment, the jobs and the local infrastructure these projects bring to other countries.”