Top artificial intelligence players have told Australia they’ll build large data centres far away from homes to avoid the type of public backlash imperilling the rollout in the US.
Reeling from moratoriums in multiple US states, including Texas, AI firms gave early assurances of building in remote areas to Deputy Prime Minister Richard Marles and junior tech minister Andrew Charlton during talks on Australia’s $150 billion AI boom in San Francisco.
Sources briefed on this week’s talks said billionaire execs were also comfortable with Prime Minister Anthony Albanese’s requirement to add renewables to the grid to offset data centres’ vast energy needs. Queensland, which owns coal plants, may use fossil fuels if cheaper than renewables after Labor softened its stance.
“This is probably the most transformational economic development of our lifetimes,” Treasurer Jim Chalmers said on Wednesday, two days after releasing analysis showing AI data centres could add to inflation.
“I’m confident that we can maximise the economic upside and minimise the risks, but it will take work.”
The in-principle agreement on Labor’s new AI standards has cleared the path to land a $21 billion deal that would make Australia the second home for Anthropic to train models. Other firms involved in meetings with Marles and Charlton this week, including Amazon, Google, Microsoft, and OpenAI, are also keen to make big investments.
The outcome also demonstrates the newfound leverage Australian officials feel they possess over Big Tech. The companies are competing for supremacy in artificial general intelligence and scrambling to build enough data centres to keep up with demand for their models. The firms are also trying to justify their eye-watering valuations, which have sparked concerns about a financial bubble.
The ongoing war in Iran has cruelled investment in the Middle East. In the US, President Donald Trump claimed this week that opposing data centres would make America “backwards and poor”, arguing that tech and strategic rival China “could not be happier with this anti-data centre movement”.
Former Trump acolyte Marjorie Taylor Greene and populist left leader Bernie Sanders have both campaigned against data centre construction. Before midterm elections in which AI will be a hot topic, Sanders hit back at Trump, saying 75 per cent of Americans oppose data centres and want “a decent future for themselves, their kids and their communities”.
Developments in the Middle East and the US have turned Australia into a more attractive destination. Australian data centres have been controversial, including over noise pollution. But the AI firms have indicated to Marles and Charlton that they know larger data centres of the future must be built in remote areas.
Marles said before the US trip that the AI boom represented the biggest hinge point in Australia’s self-reliance since World War II as AI models became pivotal in running services such as telecommunications, banking and even national security.
Australia still needs to figure out how to allow AI firms to access copyrighted Australian material to train models. The compensation model for creatives is a sticking point in the deal with Anthropic. Charlton’s blitz will continue on Wednesday in the US when he meets Commerce Secretary Howard Lutnick after meeting with Trump’s chief adviser on science and technology, Michael Kratsios.
Marles, the defence minister, said it was critical that Australia worked more closely with the US as it battled with China for tech supremacy and the Asian powerhouse sought to disseminate cheaper AI models to draw smaller nations into its orbit.
A Treasury department briefing on AI, released by Chalmers on Monday, said $150 billion could be spent on data centres in Australia by 2030. There are 162 data centres already in Australia, with another 130, including some worth tens of billions of dollars, at the planning stage.
One downside is that the build-out could take resources away from home building and push up interest rates. There are also questions about the extent to which Australia’s GDP will be boosted by data centre investment given the investment is reliant on imports.
But the upside is that AI could be a fix to Australia’s sagging productivity rate. Treasury said its own forecast of productivity in Australia of 1.2 per cent over at least the next decade is predicated on the emergence of AI.
Labor is weighing options on how to translate Australia’s comparative advantage in hosting data centres, predicated on abundant land, into higher-value AI propositions. One idea is to force big firms to reserve Australian data centres’ computing power for Australian researchers, known as “compute for access”.
“Building AI data centres here isn’t enough. We need to put conditions on that investment that guarantee our access to the best American tech while also letting us bootstrap our own local AI industry into the higher value areas like developing models and applications,” said David Wroe, the Australian Strategic Policy Institute’s head of AI.
“We don’t exactly know where the technology is going other than it’s improving very, very fast and will be utterly transformative. But wherever it goes, local expertise will be decisive.”
The Australian Chamber of Commerce and Industry warned politicians against restricting data centre construction on Wednesday, saying the country “needs a data centre plan, not a data centre panic”.
The Greens want a moratorium in Australia, but this masthead reported last month that the Coalition offered to work with Labor to avoid a political stoush that would add to public anxiety.
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Paul Sakkalis Chief Political Correspondent. He previously covered Victorian politics and won a Walkley award and the 2025 Press Gallery Journalist of the Year. Contact him securely on Signal @paulsakkal.14.Connect viaXoremail.
