$1 billion project fast-tracked amid concerns over energy use
A massive Port Melbourne data center costing almost $1 billion cleared Victoria’s planning hurdles in just 75 days over the summer; This is a sign of the state’s desperation to attract global technology investment.
Diaries of Danny Pearson, the minister tasked with luring data centers to Victoria, reveal he met big tech executives and lobbyists 16 times last year.
The Port Melbourne project is part of a wave of new data centers being built to meet Australia’s growing demand for artificial intelligence and cloud storage. As the use of artificial intelligence expands, social concerns about the high energy and water needs of data centers are also increasing.
The Port Melbourne project will add to NextDC’s existing “hyperscale” facilities in Melbourne; others are created by Microsoft, Amazon Web Services, CDC and AirTrunk.
NextDC’s Port Melbourne facility housed News Corp’s major newspaper printing facility. Age It was also published for a short time as part of an agreement with News Corp. The printing house was demolished in 2024.
The scale of the data center construction boom in Australia is also reflected in the latest results from industrial builder Goodman Group; these results reveal that centers now account for three-quarters of the $14 billion playbook.
Victoria holds a third of Australia’s data center market, competing with New South Wales, which has 56 per cent. Data centers are increasingly being built in major cities, often in industrial areas, to be closer to users and provide access to existing power and water infrastructure. These urban locations also provide the large construction workforce and specialized technical personnel needed to build and operate facilities more efficiently than regional locations.
NextDC officially proposed its Port Melbourne data centre, which will cost $911 million to build, at the end of October. In January, 75 days later, Planning Minister Sonya Kilkenny approved it. application. He did not meet with NextDC before approving the plan.
Port Melbourne hub is the latest fast-turnaround destination for high-tech building developers: AirTrunk’s $973 million Tullamarine project It was approved 44 days later last April, while the $85 million NextDC center in Geelong was approved in 28 days.
State planning reports It generally takes approximately 173 days for industrial permit approval to be displayed in metropolitan Melbourne. The Port Melbourne project was fast-tracked as its cost exceeded the $20 million threshold for state-significant developments in Melbourne.
A NextDC spokesman declined to comment when asked on Friday about the speedy approval of the planning application and how Victoria compared to other Australian states in terms of turnaround times.
Allan’s government argued that speedy approvals were a win for the state’s economic renewal. Prime Minister Jacinta Allan Visited the site in JuneWhen NextDC first publicly announced that it would apply to build the data center. In November, Allan vowed to be “ruthless” in attracting data center construction that the heavily indebted government hopes could bring in $25 billion in private investment.
Minister for Economic Growth and Jobs Danny Pearson said in December that the major investment will mean more jobs and training for the next generation of tech workers.
Pearson’s 2025 diary revealed 16 meetings with major players including NextDC, AirTrunk, Microsoft and Amazon.
He met AirTrunk general manager Robin Khuda in February. In March, he met Microsoft’s chief executive, Steven Worrall. In April, it hosted a Data Center Roundtable with industry insiders including Amazon, CDC, and NextDC. Meetings continued until May, June, September, October and December.
Asked in December about his many meetings with data center developers, Pearson emphasized that it was just his business: “They’re investors in this state, right? And I want their dollars here.”
Pearson said regulations for data centers in Victoria would be light. “You put a leash on artificial intelligence and let it work.” he said Australian Financial Review in january. “If he starts pulling away from you…then you try to say, ‘We need to intervene.’”
Data centers bring with them “power purchase agreements” with power producers that typically last a decade or two to purchase renewable energy at a fixed price. Pearson argues Victoria could use data centers “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 stakeholders” and that the Port Melbourne hub will support thousands of construction jobs and hundreds of ongoing tasks once completed.
Opposition Energy spokesman David Davis said data centers made a significant economic contribution but the projects required stricter planning and energy assessments.
Data Centers Australia represents the industry and chief executive Belinda Dennett said the pace of approval of the Port Melbourne facility was appropriate as the state competed globally to attract technology investment.
“Data center investment is a priority for the state’s economic growth, productivity and employment,” he said. “ [Victorian government] understands that speed to market is critical to the industry and approval timeframes must meet global standards to attract global workload and investment.”
However, the speed of approval was criticized by the Greens; Victorian leader Ellen Sandell accused state Labor of “allowing massive data centers to take up valuable space in the middle of our largest city”.
Sandell questioned the project’s benefits to both the environment and employment. “When the ribbon is cut on these data centres, there will be almost no jobs left,” Sandell told State Parliament last week. He said the state should not “sacrifice our drinking water, energy and inner-city prime lands just to support the profits of big tech billionaires.”
The five-story facility is located on industrial land adjacent to the West Gate Park wetlands and near the West Gate Expressway. Under the state’s rules on industrial zones, the project was exempt from the usual public notice and community objection phase that would occur if it was close to homes, a school or a hospital.
Lord Mayor Nick Reece warned the Port Melbourne project “reveals a clear policy gap” and leaves councils without the tools to manage the impacts of such developments on energy, water and emissions. While welcoming the investment, he called for urgent action to establish appropriate policies for the new centres. “Data centers are the biggest thing to hit the energy grid since the introduction of air conditioning in the 1960s,” he said. “We need to do this 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 land and is unlikely to result in unacceptable off-site impacts”.
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Clay Lucas is an investigative reporter for The Age, covering urban affairs, state and federal policy, industrial relations, health and aged care. Email him at clucas@theage.com.au or claylucas@protonmail.com or via Signal +61439828128.Connect with: X, Facebook or email.
Daniella White is The Age’s state political correspondent. Contact her at da.white@nine.com.auConnect with: X or email.
