NSW committee tables 26 recommendations to tighten data centre rules

Twenty-six recommendations for stricter data centre regulation landed on the NSW Government's desk this week, the product of an Upper House inquiry that drew 143 submissions, five public hearings and an on-site inspection of a working facility.

The NSW Legislative Council's Public Accountability and Works Committee tabled the report after a parliamentary inquiry triggered by pressure from local residents, councils, policy think tanks and government agencies. That's a broad evidentiary base for a single infrastructure sector — and the committee used it to aim squarely at the planning system.

The core finding: the existing regulatory and planning framework doesn't adequately handle what data centres do at scale.

What does the report actually target?

The report concentrates on future data centre development and planning approval processes. Its central demand is that approvals must properly address cumulative environmental impacts — the aggregated effect of clustered facilities, not just site-by-site assessments — alongside the concerns raised by communities and experts.

The inquiry's scope ran wider than planning procedure. The committee also:

• Scrutinised the existing regulatory planning framework and its gaps
• Examined the long-term energy demands of data centre buildouts
• Examined the long-term water demands of these facilities
• Evaluated the broader societal impacts of the sector's growth

Takeaway: the committee treats data centres as a strategic resource-allocation question, not a routine development application.

What did the Chair say?

Committee Chair Abigail Boyd, a Greens member of the Legislative Council, delivered one of the blunter parliamentary statements you'll read on infrastructure this year.

"The evidence that was obtained in this inquiry made very clear to me as Chair that the current rules are inadequate, that there is no social licence for this development, and that the harmful impacts on energy prices, climate change, water use, and the opportunity cost of this development on misdirected resources and colonisation of strategic lands will be immense and difficult to unwind," Boyd said.

She didn't stop at environmental and social impacts. Boyd also flagged a market-structure concern that reads more like a financial regulator's warning than a planning submission.

"Data centre development under existing market forces is exhibiting clear bubble-like characteristics," Boyd said. "Ultimately, we need a more deliberate approach to data centres and AI."

Takeaway: the Chair's position is that the market, left alone, is misallocating land, energy and water — and that the planning system is the brake.

Why the inquiry happened

The inquiry wasn't an abstract policy exercise. It responded to sustained concerns from local residents and councils living with data centre proposals, alongside input from policy think tanks and government agencies. The 143 submissions, five public hearings and the on-site facility inspection gave the committee direct evidence from the affected communities and the operators' own infrastructure.

That grounding shows in the report's structure. Rather than focusing narrowly on emissions or noise, the inquiry examined the long-term energy and water demands of facilities that run 24/7 — resource commitments that lock in demand for decades once a project is approved.

Takeaway: the committee's evidence base came from the ground up, and its recommendations reflect that.

What happens next?

The 26 recommendations now sit with the NSW Government, which must respond. The milestone that decides everything from here is that government response — whether it adopts, adapts or rejects the committee's push to harden the planning framework around cumulative impacts, energy and water demand.

Until it does, the report stands as the most detailed parliamentary reckoning yet with data centre growth in NSW: 26 recommendations, 143 submissions, and a Chair's warning that the costs of getting this wrong will be, in her words, "immense and difficult to unwind."