Wednesday, 4 March 2026

 David ETTERSHANK (Western Metropolitan) (10:47): I move:

That this house:

(1)   notes that:

(a) the recent announcement of the government’s intention to ruthlessly attract more data centres to Victoria has raised concerns about the strain this will place on the state’s energy system and water resources;

(b) the government is fast-tracking planning approval for data centres with little or no sustainability or planning policies in place for them;

(c) local councils are seeing data centre companies seeking ministerial approval in order to bypass local council approval;

(d) on 17 February 2026, the Minister for Water stated that: ‘An expert review is being undertaken by DEECA’ (Department of Energy, Environment and Climate Action) ‘with VicWater, the industry peak body, to ensure existing water-use policies for large industrial users, including data centres, keep pace with this rapidly emerging sector’;

(2)   requires the Leader of the Government, in accordance with standing order 10.01, to table in the Council, within 30 days of the house agreeing to this resolution, documents relating to the expert review, including:

(a) correspondence from the relevant minister to DEECA and VicWater instructing these agencies to undertake the review;

(b) the terms of reference for the review;

(c) any interim reports; and

(d) the reporting date for the final report of the review.

I rise to speak on our documents motion regarding data centres. Victoria currently has over 40 centres, and we have been bombarded with breathless media releases about this government’s ambition to host many, many more to position Victoria as the AI and data centre capital of Australia. The Premier has vowed to ruthlessly pursue investment with the promise of available land close to the city, serviced with water and power, all ready to be repurposed for the burgeoning industry. We are told these facilities will provide thousands of jobs and unlock billions in potential capital expenditure. While the economic benefits, which are questionable at best, are relentlessly spruiked by the government, the legitimate and growing concern around data centres’ voracious energy and water consumption are not being addressed. There appear to be few guidelines on energy procurement, water use or location, and questions around who will ultimately bear the financial and environmental cost of these centres are left unanswered.

Last year the government announced a sustainable data centre action plan, with details to be released within weeks. But the release date for this plan is yet to be announced. There are no details of what it entails, but the plan continues to pop up in government statements. The recently released Victoria: AI-Driven, Business-Ready – the Victorian Government’s AI Mission Statement trotted out the same quote – Labor’s $5.5 million sustainable data action plan is positioning the state as a ‘national leader’ in sustainable data centre investment. The mission statement uses the word ‘sustainability’ a few times in a sort of aspirational, nice-to-have kind of a way, but it is far more about attracting investment than explaining how this vision will actually impact upon Victorian communities. It reads:

Data centres, like all major infrastructure, need energy, water, planning and land allocation.

But data centres are not like other major infrastructure when it comes to energy and water use. By way of example, Greater Western Water is currently reviewing 19 applications for data centres – and that is only a small cross-section of those that are currently being applied for – which will consume nearly 20 megalitres of drinking water each year. That is the equivalent of around 4 per cent of Melbourne’s total drinking water – or to put it another way, it is equivalent to filling up eight Olympic swimming pools every year.

The Australian Energy Market Operator also estimates that data centres will use 19 per cent of Melbourne’s electricity grid by 2050. But the Minister for Economic Growth and Jobs Danny Pearson seemed quite blase about sustainability, telling the Australian Financial Review:

You put AI on a leash and you let it run … If it starts to get away from you …then you look at trying to say ‘we need to intervene …

So apparently the plan is to wait for the horse to bolt and then think about shutting the gate. In the US and Europe data centres are already competing with agriculture and residential consumption. The establishment of data centres in Europe threatens to up-end the EU climate law, which requires a reduction of net greenhouse gas emissions by at least 55 per cent by 2030 compared to 1990 levels. Similarly, communities across the world are grappling with the strain placed on electricity networks by these energy-intensive facilities, and we face the same issues. With below average rainfall and water storage capacity falling, Victoria is on track to begin water restrictions by the end of the year. Will data centres face those same restrictions – 55 litres a day, perhaps?

Minister Tierney recently stated that an expert review is being undertaken by the Department of Energy, Environment and Climate Action with VicWater, the industry peak body, to ensure existing water use policies for large industrial users, including data centres, keep pace with this rapidly emerging sector. We welcome that. We are requesting documents relating to this review, including correspondence from the relevant minister to DEECA and VicWater instructing these agencies to undertake the review, the terms of reference for the review, any interim reports and the reporting date for the final report of the review.

These facilities are being fast-tracked for planning approval. We have a right to know what the Victorian government is doing to protect our water and energy needs, now and into the future. We are not asking to turn back time. These are important economic initiatives, but we know data centres and AI are here to stay, and we also know that the sector must be regulated. We need to mandate the use of recycled water and sustainable energy, and these regulations should be in place before these data facilities are approved and built. And we need assurances that the multinational companies building these hugely profitable facilities are footing the bill, not the Victorian public. So we are keen to understand what the DEECA–VicWater expert review is doing, how it is doing it and when we will get the results. I commend the motion to the house.

 Sheena WATT (Northern Metropolitan) (10:52): The AI revolution is well and truly underway, and the Allan Labor government is ensuring that Victorians can reap the benefits of the AI boom while protecting Victorians from the dangers that AI presents. One of the primary challenges of the explosion in use of AI is the impact that it has on the environment, particularly with its use of water. Data centres that house and run the computers that power AI are already supporting critical services like transport, health and banking, but they do consume vast amounts of water for cooling. The government’s position is clear: these data centres must be sustainable in their water use. Our sustainable data centre action plan will draw billions of dollars in capital expenditure while ensuring that these centres fulfil their social licence to the community. The government already has very strong controls in place for the industrial use of water, and these new data centres are no different. Already the water corporations that are supplying these new centres are ensuring that they are designed with water efficiency in mind, whether that be through closed-loop systems that only need to be filled once, whether that be through maintaining net zero water policies or whether that is ensuring that these centres use recycled water, not water that would otherwise be used for drinking. I am recalling a recent contribution by the minister to say that they are actually looking at water alternatives, including some new technology that is currently in development.

I think it is an exciting time when it comes to the future of these data centres, because we are also ensuring that there are further safeguards in place to ensure that these data centres are doing the right thing by the communities that they are a part of. Like any non-residential water user, if these data centres were to utilise more than 100 megalitres of water in a year, that would be publicly reported by their supplying water corporation in their annual reports. Importantly, if they are using significant amounts of water, it is on them to be able to upgrade their own network capacity. These new data centres must strive to be efficient in their water use, they must report how much water they are using and they must upgrade their own network if they require more.

Ultimately, and I have got to say this probably more than once, Victoria’s water supply is for Victorians first. If these data centres want to be part of our community, that is great, but they must play by the rules. Victoria’s water corporations assess large water applications submitted by data centres and will ultimately determine if they stack up within the broader planning framework. These data centres must not disrupt the water supply of existing or emerging communities. Water corporations have the final say when it comes to this decision, and if the data centre’s very existence is going to affect the water supply of existing customers, then it will not be connected. These data centres could be a boon for jobs and investment in outer suburban Melbourne, but they must make sense within the broader social and environmental context.

In conclusion, the AI age represents both challenges and opportunities, and the government is getting the balance right. We are attracting significant investment in the state, but we are not doing so at the expense of Victoria’s most precious environment and our water supply. Our government will always put the best interests of Victorians first, and we will ensure that our state’s environmental and water regulations stay up to date and fit for purpose as these exciting new industries continue to emerge. I look forward to updates not only from the minister in this place but from industry and development as we see water alternatives possibly forming part of the cooling functions of AI centres right across the state.

There are enormous opportunities in data centres, there is no doubt about it, and I have taken the time of late to familiarise myself with some of the opportunities from AI and also to further understand what risks they may pose to our state, not just in terms of water but in terms of data sovereignty and other issues that have presented themselves. I must confess that I have shifted quite significantly in my understanding and fears about AI of late. I would like to acknowledge some folks that have taken the time to patiently – very patiently – explain to me the enormous opportunities that come from AI. But they ultimately need to be powered by data centres, and it is only right and just that we consider data centres very much here in our own state as they power the industries and businesses that keep us thriving.

 David DAVIS (Southern Metropolitan) (10:57): I am pleased to rise to speak to Mr Ettershank’s motion 1302 about data centres and the background and systems behind them and compliment him on bringing this motion to the chamber. It is a timely motion. It is a motion that focuses on one key problem area, challenge area, of these data centres, and I hasten to add at the start that there is much more. But nonetheless this is a very welcome contribution to bringing into the public domain a lot of information that is needed for the community and those who are interested in these matters to make proper decisions.

Mr Ettershank talks about the attraction of data centres, and I think we all see the importance of data centres and what they can add, both with AI and more broadly into the future, and support general efforts to bring such centres to Victoria. It is a competition between us and New South Wales and indeed overseas jurisdictions as well, and to that end that makes it more important, not less important, that we get the systems right. It makes it more important that the assessments are done more adequately, and it makes it more important that the energy and water and planning matters are all focused on up-front and got right. We cannot, as Mr Ettershank said, let the horse bolt and then go and try and catch it afterwards. That is the wrong way to go around it. The right way to go around it is to get these principles and planning steps in place.

We have seen some very fast planning turnarounds, I might say – I think about 80 days with the Fishermans Bend one in the recent period – with the fast-tracking of these planning approvals. That is almost so fast that local communities and those involved nearby or who have an interest will hardly have processed the application by that stage.

I have read the documents for that centre. I must say, whilst they do touch on many issues, they are not touched on in great depth. I just think that is an example of a planning amendment approach that is quite wholly inadequate. Eighty days is a fast track, but do we feel that the water and energy issues for that centre have been dealt with and the impact on other groups nearby? No, they have not.

This motion focuses heavily on water and the Department of Energy, Environment and Climate Action and VicWater, and no doubt Melbourne Water is involved here as well. I have yet to see anything that makes me assured that the state government have understood that they cannot just raid our general water supplies. It seems to me that we do actually have quite a lot of recycled water and the capacity for more recycled water in Melbourne, and we ought to be looking at where we can actually locate some of these centres that will utilise that and also even captured water. These things have huge roofs for a start. Why are we not requiring these to be employed at a minimum as a start?

These are all legitimate points. The government speaker pointed to the issue of sustainable water use. There is little sign that the government is actually applying such a test to these centres at this point. Then there is the issue of energy. I know Mr Bowen has had a bit to say about that recently, saying the data centres have got to bring their own energy with them. I think that is probably a little unsophisticated, but the point behind it has got some merit. There does need to be a contribution to the grid from some of these groups if they are going to be extracting large amounts of power from the grid. The stability of the grid is one issue, and it is not only the stability to keep the grid going; if these data centres come off, the actual change in the grid, the step-back in usage, is significant on the grid itself. Many of them have alternate sources of power, diesel generators principally – which, given the data centres have got to have consistency of power, I understand is a bit like a hospital. As a former health minister, we actually devoted a lot of time to thinking about how the diesel generators would cut in and out as required and so forth. It is a similar point: you have obviously got to have that backup power. But nobody seems to be focused and I do not think the Australian Energy Market Operator is focused sufficiently at this point on what is going to be required.

 Tom McINTOSH (Eastern Victoria) (11:03): The government will not oppose this documents motion, as per convention. But wow, if anyone ever needed some clarity about the lack of policy that the Liberal Party do have, whether it be on energy, water or anything broadly, that 5-minute ramble from Mr Davis absolutely pinpointed it. We have new tech, emerging technology, that is critically important to our state. It is important to businesses, it is important to our skilled workforces and it is essential that we are able to roll this technology forward. As I just highlighted, the Liberals have no plan to bring to the Victorian people about how we are going to do that, whereas on the other hand we have got the Greens, who just want to roll down the shutters and not enable anything. We heard Mr Ettershank this morning – I congratulate him – talking about his big uptake on social media and TikTok. As we all know, when you are getting that many likes, it puts a big data demand on the system for all of us using our social media and our AI, which has taken off at a rate of knots. We have to meet the moment. The reason why data centres are such a critical issue to meet the moment, as I have highlighted, is jobs, technology and everything we need as a state and as part of a nation to stay relevant and to stay at the front of developing economically within the world. We have to make sure we get the water and the energy right. We know energy is a piece that this government has been committed to and has worked on over decades to ensure that we have the renewable technology to meet the demands of our industry, of our manufacturers and of our homes. At this moment we are talking about data centres, but it has been the same in water.

It is Labor that has done the work over decades to ensure the policies and the investments have been in place to deliver the needs of industry. This particular industry, which currently takes up 2 per cent of Victoria’s power demand, 70 per cent of which is renewable, is one that we want to make sure we get right. I am currently on an inquiry into oil and gas decommissioning. It has been a major sector for Victoria in providing cheap, affordable, reliable energy for Victorians for decades, but now we are in the decommissioning process and we need to ensure we do that right.

With every new technology and every new sector that has massive investment that rolls out across our state, we quite rightly need to give the attention to what it does to those major draws on energy, water, decommissioning and environmental effects. In this case we have also got to give due concern to impacts on community, because when these centres are going in amongst communities we need to make sure, from early construction to operation, with the many benefits they bring, that we are able to ensure that communities can live nearby and either mitigate or reduce any impacts on those communities.

I thank Mr Ettershank for bringing this forward. It is a topic that will see ongoing focus, as the government has had in recent years. We will continue to focus on it so that we can ensure that Victorian workers, Victoria’s economy and our productivity can stay at the forefront of global innovation. I will leave my comments there.

Motion agreed to.