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Remove items from your saved list<\/a> to add more.<\/p>\n AAA<\/p>\n NSW and Victoria are in the midst of a data investment explosion that is now larger than last decade\u2019s mining boom, injecting tens of billions of dollars into the country, but there are doubts whether the rapid expansion will deliver long-term gains to Australians and government coffers.<\/p>\n Figures from the Australian Bureau of Statistics show that the early 2010s mining boom, which transformed the economies of Western Australia and Queensland while boosting company tax collections, is being surpassed by the explosion in data centres based in NSW and Victoria.<\/p>\n Over the past 12 months, private companies and individuals have sunk almost $300 billion into new buildings, equipment, machinery and homes in the nation\u2019s two most populous states. During the 2012-13 mining boom, capital spending in WA and Queensland peaked at around $250 billion.<\/p>\n Through the first three months of 2026, spending on equipment and machinery \u2013 most of which is destined for data centres \u2013 in NSW soared to a national record $12 billion while in Victoria it lifted to a state record of $9.1 billion<\/a>.<\/p>\n Cabinet secretary and assistant minister for the digital economy, Andrew Charlton, said if not for the surge in data centre-related spending so far this year, economic growth would have flatlined or even gone backwards.<\/p>\n He said the global data centre boom was the single largest economic lift since the railroad construction boom of the 1880s and 1890s. Data centre construction was now around 2.4 per cent of global GDP compared to the 1950s highway construction surge (1.4 per cent) and electrification through the 1930s (2 per cent).<\/p>\n<\/p>\n Charlton is bullish that data centres and the AI they enable will deliver an economic transformation for Australia that will ultimately boost productivity, create new businesses and lift overall living standards.<\/p>\n \u201cThat is the real prize. Not simply hosting the infrastructure of the AI age, but using it to build a more productive economy, create better jobs, lift living standards, and support a vibrant culture that helps create new Australian businesses,\u201d he said.<\/p>\n Australia is already home to an estimated 278 data centres, ranking it among the top 10 nations in the world for such centres. More than 100 of them are based in Sydney while another 61 are in Melbourne.<\/a> There are plans for more worth tens of billions of dollars.<\/p>\n Related Charlton said there had been pushback against the new technology<\/a>, especially in the United States, where ordinary Americans were being asked to pay more for their electricity and water that is being used for new data centres<\/a>.<\/p>\n He said governments in Australia were ensuring data centres had the \u201csocial licence\u201d to operate, such as requirements to supply grid-scale renewable energy that ensured local communities were not financially hurt.<\/p>\n \u201cWe have to be able to look Australians in the eye and say their power bills won\u2019t go up because of a data centre, that they won\u2019t run out of water,\u201d he said.<\/p>\n \u201cI think in Australia, because we\u2019ve had these discussions with companies at the start, we\u2019re getting the social licence situation right.\u201d<\/p>\n But like any boom, there are potential downsides.<\/p>\n The head of the nation\u2019s banking sector regulator, John Lonsdale, on Friday warned a Senate committee that advances in artificial intelligence was creating enormous financial opportunities but also new vulnerabilities.<\/p>\n Many data centres are being financed by so-called private credit which is effectively out of non-bank sources. Analysts Morgan Stanley estimates that of the $US2.9 trillion expected to be spent on data centre construction by 2028, about $US800 billion will come from private sources.<\/p>\n \u201cWhile exposures in Australia remain relatively contained, international developments have the potential to transmit risks into the domestic system, and we are maintaining a strong supervisory focus in this area,\u201d Lonsdale said.<\/p>\n Related Article The data centre boom has caught central banks, and their interest rate settings, by surprise.<\/p>\n \u201cAs it turned out, through the second half of 2025 \u2013 and [it] continues now \u2013 the AI boom in the United States [has] absolutely supercharged everything,\u201d Reserve Bank governor Michele Bullock said last week.<\/p>\n \u201cWe were seeing activity slow. The world was seeing activity slow. All of a sudden, everything reversed.\u201d<\/p>\n Westpac chief economist Luci Ellis said the current data centre boom resembled the 2010s mining boom, noting they could be disruptive to the rest of the economy as they sucked in resources while they were largely impervious to interest rate settings.<\/p>\n \u201cThe current data centre boom is more of a wave than a bump, bearing a considerable resemblance to the mining investment boom of the first decade and a half of the century. They are fundamental drivers of outcomes for multiple years,\u201d she said.<\/p>\n Ellis said the date centre boom appeared larger in Australia than most other comparable nations, partly due to easy access to renewable energy and a \u201cwelcoming\u201d regulatory environment.<\/p>\n But she cautioned the boom could come to an abrupt end.<\/p>\n \u201cThe downswing of the mining investment boom was an enormous drag on Australia\u2019s economic performance, even when the level of investment was still high,\u201d she said.<\/p>\n \u201cSince it takes a lot less time to build an individual data centre than an enormous iron ore or gas project, the ramp-up and unwind could be steeper and shorter this time around.\u201d<\/p>\n Independent economist Saul Eslake said the boom was being built on largely imported computer equipment which meant it actually detracted from overall economic growth.<\/p>\n Related Article He said while the mining boom generated large amounts of tax revenue as resources were sold, there were questions whether the data boom would deliver a boost to national coffers.<\/p>\n \u201cThe mining companies which undertook all that investment boom pay a lot of company tax (maybe not the gas companies) \u2013 will the companies operating the data centres produce \u2018rivers of gold\u2019 for the federal budget?\u201d he said.<\/p>\n Cut through the noise of federal politics with news, views and expert analysis. 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Over the past 12 months, private companies and individuals have sunk almost $300 billion into new buildings, equipment, machinery and homes in NSW and Victoria.Marija Ercegovac<\/p>\n![\"Data](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/1780887803_474_d386fadb2f630e84552c73f5a61a1a797d1417f31e5e715c13ef1f9e0fb1fad3.gif\")
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Shane Wright<\/a> is a senior economics correspondent for The Sydney Morning Herald and The Age.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"Save You have reached your maximum number of saved items. Remove items from your saved list to add…\n","protected":false},"author":2,"featured_media":721711,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-722215","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/722215","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=722215"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/722215\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/721711"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=722215"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=722215"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=722215"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}