{"id":591294,"date":"2026-04-07T13:20:39","date_gmt":"2026-04-07T13:20:39","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/591294\/"},"modified":"2026-04-07T13:20:39","modified_gmt":"2026-04-07T13:20:39","slug":"data-centres-drive-growth-but-is-it-enough-2","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/591294\/","title":{"rendered":"Data centres drive growth, but is it enough?"},"content":{"rendered":"

\"David<\/p>\n

April 6, 2026 \u2014 12:18pm<\/p>\n

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There\u2019s a number the data centre industry doesn\u2019t love talking about. For every $100 poured into a fully loaded hyperscale facility in Australia \u2013 the kind Amazon<\/a>, Google and Microsoft<\/a> are building to serve new AI tools \u2013 somewhere between $70 and $80 leaves the country almost immediately. It flows to semiconductor makers in Taiwan, server manufacturers in the United States and cooling equipment giants in Europe.<\/p>\n

You wouldn\u2019t know this from the way the industry talks about itself. The headline numbers sound intoxicating: $26 billion in baseline investment by 2030, potentially $52 billion more, according to a Deloitte report<\/a> \u2013 commissioned and paid for by Google \u2013 that envisions turning Australia into Asia Pacific\u2019s AI hub.<\/p>\n

\"OnOn AI, Atlassian\u2019s billionaire co-founder, Scott Farquhar, says Australia should be \u201cexporting megawatts as megabytes and getting paid megabucks\u201d.Dominic Lorrimer<\/p>\n

The stakes are unusually high. Data centre investment decisions being made in the next two to three years will determine where this infrastructure sits for a generation, and to what degree Australia actually benefits. The promise is that Australian businesses will gain cheaper access to AI computing power, attract global tech talent, turbocharge productivity in industries from mining to healthcare, and catalyse billions in new renewable energy investment.<\/p>\n

Atlassian\u2019s billionaire co-founder, Scott Farquhar, reckons we should be \u201cexporting megawatts as megabytes and getting paid megabucks\u201d. Canva co-founder Cameron Adams says that data centres are the \u201cbiggest opportunity that I can see to add on an entirely new layer to Australia\u2019s economy and kind of start diversifying us away from resources\u201d. Steven Worrall, a former Microsoft executive now leading Telstra\u2019s AI push, routinely calls it \u201cone of the great economic opportunities for Australia\u201d.<\/p>\n

The Albanese government, too, has been ebullient. \u201cReally, this technological revolution driven by AI is a huge focus of the cabinet,\u201d Treasurer Jim Chalmers said last month, crediting data centres with single-handedly driving a rebound in national business investment. \u201cThere\u2019s a lot of investment flowing.\u201d<\/p>\n

They might be right. But the Australian Bureau of Statistics is telling a different story, noting this year that the surge in data centre investment was \u201csupported by a corresponding rise in imports, leading to a reduced impact on GDP\u201d.<\/p>\n

Translation: the money is passing through Australia like water through a pipe.<\/p>\n

Follow the money<\/p>\n

The leakage is significant, and structural. When a hyperscaler (think the likes of Amazon, Google) builds and fills its own facility, the IT equipment \u2013 the servers, GPUs, networking \u2013 eats 70 to 75 per cent of total cost, according to analysis from consulting firm Alpha Matica. Australia manufactures none of it \u2013 no chips, no servers and no racks. Every dollar goes straight overseas to the likes of chip companies Nvidia, AMD, Broadcom and their East Asian foundries.<\/p>\n

Of the remaining 25 to 30 per cent for the physical building, the Alpha Matica modelling suggests roughly another $12 to $15 of every $100 invested disappears offshore to buy power supply systems, cooling infrastructure and generators from Schneider Electric, Vertiv and their ilk. What stays? About $10 to $15. That goes towards costs such as real estate, concrete, sparky labour, project management \u2013 all of which is in high demand from other sectors of the economy.<\/p>\n

\"TheThe NextDC data centre in Footscray. When Australian-founded operators such as NextDC, AirTrunk and CDC use co-location builds, the economics improve dramatically.Eddie JimRelated Article\"Data<\/a><\/p>\n

The economics improve dramatically when Australian-founded operators like NextDC, AirTrunk and CDC are the ones building. Their model is different: they construct the physical facility \u2013 the shell, the power systems, the cooling \u2013 and then lease space to tenants who bring their own hardware.<\/p>\n

Because the imported computing equipment isn\u2019t part of their spend, modelled estimates from Morgan Stanley Research indicate that about $45 to $55 of every $100 stays onshore. The total investment is much smaller \u2013 you\u2019re building the building, not filling it with GPUs \u2013 but the share captured by the domestic economy is higher.<\/p>\n

The tax question is worse than you think<\/p>\n

If it is a big tech multinational behind a data centre, that raises another question: what slice does the government get in return?<\/p>\n

Take Google for example. The tech giant paid $92.6 million in income tax in Australia in 2022, the last year it reported the amount of \u201cgross revenue\u201d it made in the country, which totalled a staggering $8.4 billion.<\/p>\n

\"GoogleGoogle could be a big data centre investor in Australia. How much benefit that provides is another question.Bloomberg<\/p>\n

Equinix, a US-headquartered data centre giant that operates major facilities in Sydney and Melbourne, has reported $246 million in Australian revenue while paying $6 million in tax. Of course, there are plenty of perfectly legal ways of minimising the amount of tax paid in a jurisdiction like Australia, such as agreements to pay related companies in lower tax jurisdictions offshore for intellectual property or debt.<\/p>\n

The Australian Tax Office is challenging some of those arrangements, and new rules cap debt deductions at 30 per cent of a common measure of a company\u2019s earnings. But let\u2019s be real: these debt strategies have been a feature of multinational tech operations for two decades, and we\u2019re still chasing the same problems.<\/p>\n

Related Article\"Anthropic<\/a><\/p>\n

Meanwhile, the same multinationals building data centres on Australian soil are fighting tooth and nail against proposed copyright reforms<\/a> that would force them to pay Australian media companies for the content their AI models were trained on: a reminder that the struggle over who captures value from the digital economy extends well beyond tax.<\/p>\n

For context, the mining sector paid $48 billion in company tax in 2023-24, which is more than half of all tax collected from large corporates. Industry-commissioned research from Data Centres Australia, the industry\u2019s peak lobby group, claims data centres generate the highest gross value added per unit of energy consumed of any sector, at $12.6 billion per terawatt-hour, though that figure captures the economic activity data centres enable, not the value the facilities produce directly.<\/p>\n

Still, the gap between value generated in Australia and value captured by Australia remains gargantuan, and will continue to widen unless something\u2019s done about it.<\/p>\n

The multiplier defence<\/p>\n

The industry\u2019s strongest argument \u2013 and the hardest to verify \u2013 is indirect returns. The Deloitte report argues that for every dollar spent on domestic construction, roughly three dollars of economic activity flows through the wider economy: through supply chains, logistics, materials, local services and wages. Applied to the full hub scenario, Deloitte models $134 billion in cumulative GDP uplift by 2050, with the biggest gains coming not from the building phase but from the productivity boost as cheaper, faster AI capability spreads across Australian industries.<\/p>\n

Daniel Roberts, whose company Iren runs renewable-powered facilities for Microsoft, says: \u201cAll we need to do is monetise [renewable energy] into a more refined product like compute and export it.\u201d<\/p>\n

\"IrenIren co-chief executive Daniel Roberts at the AFR Entrepreneur Summit in 2024.Oscar Colman<\/p>\n

That\u2019s a compelling vision, even when you consider Roberts\u2019 biases. You can see it, if you squint a bit: Australia as a refiner of energy into intelligence, the way it once refined bauxite into aluminium. But the e61 Institute \u2013 a non-partisan economic research agency \u2013 offers a cold shower: \u201cData centre operators are capital-intensive and relatively small employers\u201d, with only 11,500 workers in the entire sector.<\/p>\n

The productivity dividend requires massive follow-through in software, research and development and skills. It doesn\u2019t materialise just because you\u2019ve poured a slab in western Sydney.<\/p>\n

Then there\u2019s energy. Data centres consume 2 per cent of grid electricity now. Australian Energy Market Operator projects 6 per cent by 2030 growing to 12 per cent by 2050. Without matched renewables<\/a>, wholesale prices could jump some 26 per cent in NSW by 2035.<\/p>\n

\"AA data centre in Huntingwood in western Sydney.Dominic Lorrimer<\/p>\n

Put that in household terms: if you\u2019re already struggling with your power bill, the unchecked expansion of data centres without concurrent investment in new generation capacity could make it meaningfully worse.<\/p>\n

Farquhar points out Singapore has imposed a moratorium because it\u2019s run out of power and land. His point is that Australia \u2013 a continent many hundreds of times Singapore\u2019s size, with some of the best solar and wind resources on the planet \u2013 doesn\u2019t face those constraints. Fair enough. But having advantages and monetising them are different things, and we haven\u2019t demonstrated we can do both simultaneously.<\/p>\n

Related Article\"After<\/a>The verdict<\/p>\n

For every $100 in hyperscale data centre investment, Australia\u2019s direct take as it stands currently is painfully thin. The way it shakes out, we get $10 to $15 retained, modest tax income and a handful of jobs.<\/p>\n

The real return \u2013 multipliers, productivity, sovereign capability \u2013 is legitimate but conditional on policy choices we haven\u2019t yet made.<\/p>\n

\u201cWe absolutely haven\u2019t missed it,\u201d Roberts says. \u201cBut we absolutely could miss it.\u201d<\/p>\n

Casey Flint, an Australian venture capital investor who now serves as chief of staff at San Francisco-based AI start-up ReflectionAI, frets about a world where the AI and compute boom happens elsewhere, leaving Australia as a mere consumer.<\/p>\n

\"CaseyCasey Flint of ReflectionAI.AFR<\/p>\n

\u201cMy main worry is that there\u2019s like an offshoring event on a level with or on a magnitude we\u2019ve never seen before,\u201d she says.<\/p>\n

In that scenario, the country sends its data, capital and talent to offshore data centre hubs then buys back AI capacity at a premium.<\/p>\n

Google has signalled uncertainty about its $20 billion Australian data centre commitment, and told the government it needs clearer policy settings before proceeding.<\/p>\n

There\u2019s widespread agreement that Australia needs access to this kind of infrastructure. But we should go in with clear eyes about who really captures the value.<\/p>\n

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning<\/a>.<\/p>\n

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\"DavidDavid Swan<\/a> is the technology editor for The Age and The Sydney Morning Herald. He was previously technology editor for The Australian newspaper.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"April 6, 2026 \u2014 12:18pm Save You have reached your maximum number of saved items. Remove items from…\n","protected":false},"author":2,"featured_media":588559,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[256,254,255,64,63,105],"class_list":["post-591294","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-au","tag-australia","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/591294","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=591294"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/591294\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/588559"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=591294"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=591294"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=591294"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}