A suburban data centre ban is in the draft AI laws the Albanese government is preparing. The Australian Financial Review reported on 29 October that the rules would prohibit new data centres in suburban Australia. Inner Sydney and Melbourne business parks would be the first test. Public consultation is due by the end of 2026.
Gigawatt-scale proposals would be steered to regional sites. CDC has a 1.4 GW campus planned at Wagga Wagga. Zerra DC’s Western Downs Digital Park near Dalby, where Anthropic has signed a lease pending FIRB, is another. AirTrunk has proposed a 550 MW campus on the former Hydro Aluminium smelter site near Kurri Kurri.
What the suburban data centre ban would change
NextDC lodged applications for M3 stages 6 and 7 in February and expects a Victorian government decision after the state election on 28 November. GreenSquareDC’s Spotswood campus and Centuria’s second Clayton building are also under assessment. Those Melbourne projects sit in the inner west, the area where community opposition already delayed power upgrades to the existing M3 site.
The same week Capital Brief reported that developers were blindsided by proposed energy rules that could apply a renewables mandate more broadly than expected. Existing facilities and projects that thought they would be grandfathered could face obligations worth billions. Chris Bowen has floated power cuts as a possible penalty for non-compliant centres. The suburban ban and the energy rules are travelling together in the draft package.
Why the location rule is now on the table
Operators have spent two years arguing that the constraint is power, water and planning. The draft ban is the first time the government has said publicly that suburban locations themselves are the problem. Inner-city business parks in Sydney and Melbourne are the places where the transmission fights have already happened. Regional sites avoid those streets, but they still need the grid.
