1 day ago
1
February 23, 2026 — 5:00am
A massive Port Melbourne data centre, costing almost $1 billion, cleared Victorian planning hurdles in just 75 days over summer, in a sign of the state’s desperation to attract global tech investment.
It comes as the diaries of the minister tasked with enticing data centres to Victoria, Danny Pearson, reveal he met big tech chief executives and lobbyists 16 times last year.
The Port Melbourne project is part of a wave of new data centres being built to handle Australia’s increasing demand for artificial intelligence and cloud storage. While AI use is expanding, there is growing community concern over data centres’ high energy and water needs.
The Port Melbourne project will add to NextDC’s existing “hyperscale” facilities in Melbourne; others have been built by Microsoft, Amazon Web Services, CDC, and AirTrunk.
NextDC’s Port Melbourne site had housed News Corp’s major newspaper printing plant, where The Age was also published for a brief period under an agreement with News Corp. The printing plant was demolished in 2024.
The scale of Australia’s data centre construction boom is reflected in recent results from industrial builder Goodman Group, which revealed the centres now account for three-quarters of its $14 billion workbook.
Victoria holds one-third of Australia’s data centre market and is competing against New South Wales, which has 56 per cent. Data centres are increasingly built in major cities, largely in industrial areas, to be closer to users, and to access existing power and water infrastructure. These urban locations also provide the large construction workforces and specialised tech staff needed to build and operate the facilities more efficiently than in regional areas.
NextDC formally proposed the Port Melbourne data centre, to cost $911 million to build, at the end of October. In January, 75 days later, Planning Minister, Sonya Kilkenny, approved the application. She did not meet NextDC before approving the plan.
The Port Melbourne centre is just the latest quick turnaround for developers of the high-tech buildings: AirTrunk had a $973 million Tullamarine project approved last April after 44 days, while an $85 million NextDC centre in Geelong was approved in 28 days.
Government planning reports show an industrial permit approval in metropolitan Melbourne usually takes around 173 days. The Port Melbourne project was fast-tracked because its cost exceeds the $20 million threshold for state-significant developments in Melbourne.
Asked on Friday about the planning application’s rapid approval, and how Victoria compared with other Australian states for turnaround times, a NextDC spokeswoman declined to comment.
The Allan government has championed rapid approvals as a win for the state’s economic renewal. Premier Jacinta Allan visited the site in June, when NextDC first said publicly it would apply to build the data centre. In November, Allan promised to be “ruthless” about attracting data centre construction, which the heavily indebted government hopes could bring in $25 billion in private investment.
Minister for Economic Growth and Jobs Danny Pearson said in December the major investment would mean more jobs and training for the next generation of tech workers.
Pearson’s diary for 2025 revealed 16 meetings with key players – including NextDC, AirTrunk, Microsoft and Amazon.
In February, he met AirTrunk chief executive Robin Khuda. In March, he met Microsoft’s managing director Steven Worrall. In April, he hosted a Data Centre Roundtable attended by a who’s who of the sector, including Amazon, CDC, and NextDC. The meetings continued through May, June, September, October, and December.
Asked in December about his many meetings with data centre developers, Pearson was emphatic it was simply his job: “They’re investors in this state, yeah? And I want their dollars here.”
Pearson has said that regulation of data centres in Victoria will be light. “You put AI on a leash and you let it run,” he told The Australian Financial Review in January. “If it starts to get away from you … then you look at trying to say, ‘We need to intervene.’ ”
Data centres bring with them “power purchase agreements” signed with electricity generators, typically lasting a decade or two to buy renewable energy at a fixed price. Pearson argues Victoria can use data centres “to fast track the decarbonisation of the Victorian economy”.
A government spokesman on Friday said it was “both expected and appropriate for ministers to engage with their stakeholders”, and that the Port Melbourne centre would support thousands of construction jobs and hundreds of ongoing roles once it was finished.
Opposition Energy spokesman, David Davis, said while data centres made an important economic contribution, the projects required more rigorous planning and energy assessments.
Data Centres Australia represents the sector and chief executive Belinda Dennett said the speed with which the Port Melbourne facility had been approved was appropriate because the state was in a global competition to attract tech investment.
“Data centre investment is a priority for the state’s economic growth, for productivity and for jobs,” she said. “The [Victorian government] understands that speed to market is critical to the sector and that to attract global workloads and investment, approval time frames need to meet global standards.”
The speed of the approval drew criticism from the Greens, though, with Victorian leader Ellen Sandell accusing state Labor of “letting huge data centres take up precious space in the middle of our biggest city”.
Sandell questioned both the environmental and employment benefits of the project. “Once the ribbon is cut on these data centres there are hardly any jobs in them,” Sandell told state Parliament last week. She said the state should not be “sacrificing our drinking water, our energy and our prime inner-city land just to supplement the profits of big tech billionaires”.
The five-storey facility is on industrial land adjacent to the West Gate Park wetlands, and close to the West Gate Freeway. Under state rules for industrial zones, the development was exempt from the usual public notice and community objection phase that would happen if it was close to homes, a school or a hospital.
Lord Mayor Nick Reece warned the Port Melbourne project had exposed a “clear policy gap,” leaving city councils without the tools to manage the impacts of such developments on energy, water and emissions. And while welcoming the investment, he called for urgent action to create proper policies for new centres. “Data centres are the biggest thing to hit the energy grid since the introduction of air conditioning in the 1960s,” he said. “We need to get it right.”
The government’s planning assessment of NextDC’s Port Melbourne data centre, which will operate 24 hours a day and support up to 180 staff and visitors, said it was “an appropriate use and development of the land and is unlikely to result in unacceptable off-site impacts”.
The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.
