The NSW Legislative Council’s inquiry into data centres: defining the direction of digital infrastructure in NSW

The Public Accountability and Works Committee of the New South Wales (NSW) Legislative Council recently commenced an inquiry into data centres. This inquiry, the first of its kind in Australia, underscores growing scrutiny of data centres by public officials to ensure preparedness for current and future technological demands and their increasing significance to daily life, business and the state’s economy.

What is a parliamentary inquiry?

A parliamentary inquiry is a type of formal investigation in Australia and in each of the states and territories, conducted by a parliamentary committee into matters of public importance. This involves the committee gathering and analysing evidence which is then used as the basis of interim and final reports containing recommendations to the government. The findings and recommendations of the committee are non-binding on the government but can be persuasive in shaping government policy, especially if they expose deficiencies and other problems that require attention. 

The conduct of inquiries is governed by rules prescribed by a parliamentary chamber (i.e. the Legislative Council) and by the committee itself. The scope of an inquiry is defined by the terms of reference.

The committee will initially establish a timeline for an inquiry, which will include:

• a deadline for submissions; and
• a date or multiple dates for public hearings. 

As part of the submissions stage, members of the public have an opportunity to convey their views on the matter within the terms of reference. This is not limited to individuals, with peak bodies, businesses and organisations routinely lodging submissions. These submissions are considered by the committee as part of the inquiry.

Following the closing of submissions, the committee will conduct a hearing during which individuals or representatives of an organisation will be examined on the subject matter. Individuals brought before the committee are generally invited to appear by the committee. However, the committee may summon a witness in certain circumstances, compelling attendance. Hearings are generally open to the public, with transcripts usually available after the hearing.

Following a hearing, the committee will deliberate on all material and produce a report of its findings. Depending on the complexity of the subject matter and the need for further material, there may be additional hearings and interim reports. The reports contain recommendations for the government, which can be implemented with or without legislation. The government is required to respond to each report (including interim reports) should the committee recommend government action. It generally does so by indicating whether it supports a recommendation and the rationale for its position.

Data centres inquiry

The inquiry commenced on 29 January 2026, with the terms of reference self-referred by the Public Accountability and Works Committee. The committee is chaired by Abigail Boyd (Greens) and comprises seven members of the Legislative Council (three Labor, two Liberals, one Greens and one Independent). 

Submissions for the inquiry opened on 4 February 2026 and will close on 27 March 2026. The terms of reference can be viewed online.

The committee has listed the hearings for 1, 8 and 22 May 2026, with all hearings to be held at Parliament House in Sydney. 

The committee must report on the inquiry by 30 September 2026.  

Purpose and significance of the inquiry

The rapid growth of data centres in NSW has raised concerns about their impact on the environment, the economy and local communities. The inquiry will examine whether NSW is equipped for current and future data centre growth, and whether plans adequately account for its immediate and long-term impacts.

Although the Australian National AI Plan mentions that the Federal Government will collaborate with the states and territories to establish national data centre principles, there is currently a lack of clarity regarding the specifics of how the Federal Government intends to coordinate its data centre strategy. The inquiry's broad terms of reference allow the committee to examine a range of policy areas, including environmental impact, water usage, electricity demand, planning regulation and support for local communities. The breadth of the inquiry reflects the wide-ranging implications data centres will have on legislation, regulation and policy, along with a desire for a whole-of-government strategy.

A key focus of the inquiry is identifying the infrastructure needed to support stable industry growth. There are growing community concerns about the energy and water requirements of data centres, the additional pressure on the electricity grid, the effect on power bills and reliability for consumers and the ability to meet carbon emissions targets. 

The NSW Government has already taken steps to address energy concerns. Through the Investment Delivery Authority, which was established by the current NSW Government to support and fast-track major investment projects, 14 renewable energy projects worth $34 billion have been endorsed. 

This inquiry is also pertinent to the ongoing competition between New South Wales, Victoria and other states and territories to establish themselves as the leading destination for data centre investment in Australia. 

Victoria, which already hosts more than 40 data centres, has prioritised faster project delivery through streamlined approvals^[1] and offers strong government support. This was evident with the approval of the NextDC data centre development in Port Melbourne, which took just 75 days. Victoria has also published its AI Mission Statement setting out the Victorian Government’s plan to develop and adopt AI, and Melbourne has also been designated as the host of the Australian Data Center World and The AI Summit in September 2026, reinforcing its push to be a national and regional hub for data centres. Without a clear and coordinated response, NSW risks losing investment to jurisdictions offering greater regulatory certainty and speed to market.

Timing further amplifies the significance of the inquiry. With the NSW state election scheduled for 13 March 2027 and the committee required to report beforehand, the inquiry’s findings are likely to inform the policy platforms of major political parties. On the issues before the inquiry, the Greens have publicly expressed concerns regarding the social and environmental impacts of data centres, while the Liberals have commented publicly on their concerns in respect of AI investment and development.^[2] Noting the make-up of the committee as discussed above, each of the political parties may interpret and assess the material presented to the Committee in a manner that reflects (likely) their electioneering purposes. 

Next steps

The inquiry will furnish the NSW Government with recommendations on key policy areas to facilitate the future development and regulation of data centres in NSW, as well as on what further planning is needed to support the rapid development of this industry. As the first of its kind in Australia, the inquiry’s findings and recommendations, along with any steps the NSW Government takes in response, including the passage of legislation, may serve as guidance for the Federal and other state/territory governments. You can stay informed on the inquiry by visiting its webpage.

The deadline for submissions is 27 March 2026. 

Should you have any questions about the inquiry or would like assistance in drafting a submission, please do not hesitate to contact us. 
 

^{[1] C.f. As of 11 March 2026, Industrial Permit Approval Process Average Planning Permit Approval is 119.1 days for all applications, 144.2 days for standard applications, and 39.3 days for VicSmart applications. ‘Planning permit activity reporting’, Department of Transport and Planning’ (webpage, 11 March 2026). 
[2] ‘Data centre inquiry must consider the AI opportunity for NSW’, Liberal New South Wales (webpage, 30 January 2026); ‘Three failures, one consequence: losing NSW’s data centre and AI future to Victoria’, Liberal New South Wales (webpage, 20 February 2026).}