A New South Wales (NSW) legislative committee has urged data-center developers to cover efficient water-service and upgrade costs while calling for broader checks as water and infrastructure limits may constrain future expansion.
The Public Accountability and Works Committee tabled its report Thursday. Members said the current project-level process can miss strain that builds as facilities cluster. They called for consent authorities to weigh cumulative effects when deciding applications classified as State Significant Development.
In separate 6-1 votes, the committee removed proposals for a state moratorium and for NSW to seek a national pause through the federal National Cabinet. Committee Chair Abigail Boyd was the only member to oppose removing either proposal. In the report’s foreword, Boyd said, “We need a moratorium on new AI data centre approvals.”
For water, the committee proposed a cost framework under which project proponents would pay the efficient expense of serving a facility’s demand, with necessary infrastructure work included in that calculation. It also recommended a public register covering proposed and approved facilities, with expected electricity and water use, compliance with state guidelines and cumulative-impact assessments.
Other recommendations include a state AI and data-center strategy, 100% renewable energy on an hourly basis, better public information about electricity demand and reduced reliance on diesel backup generation. These are proposals for the government, not requirements already in force.
The committee said data-center locations have been shaped largely by commercial decisions and existing infrastructure, rather than coordinated state planning. At the time of the inquiry, Australia had 312 data centers, about 90 of them in NSW. The report said host communities may experience local impacts while operators, tenants and the wider digital economy gain economically.
The report also cited Ireland, where a de facto pause on data-center grid connections took effect in 2021, followed by a new connection policy in 2025. NSW released its Data Centre Policy Framework and Guidelines on Aug. 17, setting six principles and a 75-day departmental assessment target for qualifying projects. The report says that target may not cover the full approval process. The NSW Government’s response to the inquiry is due Feb. 5, 2027.
