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Victorian Labor MPs at the state and federal level are breaking from the Allan government’s aggressive drive to attract data centres, increasingly siding with residents amid growing anxiety about the AI infrastructure gold rush in their electorates.
Community concern over the long-term impacts of the rapid industry expansion, and who stands to benefit, is setting up a critical political flashpoint, including in outer-suburban and regional Labor seats increasingly under threat from a surging One Nation before the November state election.
The internal political pushback follows recent revelations by this masthead about two contentious projects. In one case, data centre giant NextDC bought a 169-hectare chunk of land near Geelong long earmarked for future residential development, throwing the promise of more than 2000 new homes into doubt.
The other involves a proposal by developer Syncline for Australia’s largest-ever data centre, a 350-hectare, 2.4-gigawatt development in Plumpton, in Melbourne’s outer north-west. The sheer scale of the Plumpton project would require more electricity than the total output of Victoria’s largest remaining coal-fired power station.
At a budget estimates hearing in May, Premier Jacinta Allan maintained her firm stance on welcoming data centres, vowing that the state wanted to attract “as many as we possibly can”, provided they go through proper channels.
However, data centres are increasingly being approved through the state government’s Development Facilitation Program. The fast-track mechanism effectively sidelines local councils and strips residents of the right to appeal decisions through VCAT.
Labor sources in Melbourne’s west say there is acute voter anxiety that the region is being treated as a dumping ground for the rest of the city, bearing the brunt of heavy infrastructure while delivering little back to local communities.
Federal Labor MPs Sam Rae and Alice Jordan-Baird released a joint statement confirming they had been inundated by residents who were “deeply concerned” by the Plumpton proposal.
“People in our community are rightly asking questions about what a development of this scale could mean for our growing suburbs,” the statement said. “The west cannot simply become the destination for infrastructure that places additional strain on resources while delivering little in return.”
The proposal is located in the state seat of Sydenham, where Labor MP Natalie Hutchins is retiring. The seat is viewed by Labor as among those under threat from a surging One Nation.
Labor candidate for the seat Uros Rasic has vowed on social media that he “won’t stand” for the Plumpton proposal and wants more detail on it.
“We want answers, and we want them now,” he said.
The developer, Syncline Energy, which built the nearby Melbourne Renewable Energy Hub, has vowed to consult the local community.
Chief executive Phil Galloway said it would have its own gas turbine energy generation to protect the grid from disruption and make use of recycled water and an onsite dam, and the proposal would include community green spaces.
The federal government has promised to force new data centres to generate enough power to cover their needs, but experts have said it would be nearly impossible for all of that power to come from renewable sources.
A community petition opposing the project sponsored by Legalise Cannabis MP David Ettershank has gained more than 3000 signatures.
NextDC’s expansion to the outskirts of Geelong has intensified fears of negative community impacts, marking the first time a major operator has bought directly into a designated residential zone. NextDC has refused to answer questions about its land purchase or plans for the site.
Member for Lara Ella George said she shared her constituents’ concerns about building heavy digital infrastructure in residential areas slated for 2000 homes.
“Many local residents have raised their concerns about a data centre company purchasing land in an area that is earmarked for future residential development,” said George said, whose seat is also considered at risk to One Nation.
“As a local MP, my role is to listen to the community I represent and advocate on their behalf. I’ve raised these concerns with the relevant ministers, and I’ll continue to do so. If a proposal for a data centre in Lovely Banks is put to the state government, it’s my expectation that concerns from local residents are considered as part of the decision-making process.”
Footscray Labor MP Katie Hall has written to the planning minister supporting residents opposing the expansion of an existing NextDC data centre in West Footscray.
“Residents have been rightfully frustrated by the construction impacts of the existing data centre,” she wrote.
Data centres are yet to take centre stage in Australian elections, but public sentiment and polling results in the US – seen as a few years ahead of Australia in its uptake of the infrastructure – provide a warning for the Victorian Labor government.
In the US, a bipartisan voter backlash against data centres – triggered by soaring household utility bills and power grid constraints – has seen dozens of projects blocked and elections fought on the issue.
This week, New York Governor Kathy Hochul mandated a one-year statewide pause on large data centre facilities in response to community backlash.
On Wednesday, Prime Minister Anthony Albanese announced new requirements that would force data centres to generate their own energy and pledged to ensure they “do not increase power prices for Australians”.
He added that the computing factories used to power AI models should not compete with housing developers for land.
Victorian Labor has rolled out the red carpet for data centre companies and openly vowed to aggressively court them to the state. The boom is driving economic growth and accounting for all growth in commercial construction in the state.
The Coalition has not campaigned on the issue and has so far been cautious in its comments on the industry.
However, the Victorian Greens have strongly campaigned against the industry, and One Nation – yet to announce any candidates ahead of November’s state election – has started to campaign against it federally.
Central to criticisms of data centres is that they provide limited ongoing jobs – beyond intensive skilled labour requirements during construction – while placing a heavy burden on electricity and water resources.
A spokesperson for the Victorian government said Labor was putting local jobs, communities and household energy bills first.
“We’re working with the Commonwealth to prevent data centres increasing bills for households and businesses,” the spokesperson said.
Most data centre investment in Australia is centred in Melbourne and Sydney. While Sydney has a greater current investment, cheaper land and easier transmission access in Victoria is providing the state with an edge over NSW.
The availability of old industrial land and disused farmland on the city’s fringe has made Melbourne’s north-western suburbs the centre of data centre proposals.
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