Chart of the Month - March 2026

Every era has its key resource. In the Bronze Age it was tin, and in the 20th century it was oil. As we move into the AI era, data centres are emerging as the key resource, and Australia ranks eighth in the world for the number of data centres as of March 2026 (see chart below). Australia has more data centres than much larger countries like Japan and Brazil. And with AUD 150 billion investment in the pipeline, Australia’s capacity is expected to more than triple by 2030. Now, Australia must establish itself as a regional hub.

“Data centres rely heavily on strategic location. Proximity to end users, access to power, reliable connectivity, and land availability drive site selection.” Knight Frank Data Centres Global Report 2025.

The Australian advantage

“Across most of these crucial AI factors, Australia is either less constrained than its neighbours or has an outright natural advantage over them,” John O’Mahony, Deloitte Access Economics.

Seven factors provide Australia with a competitive advantage in data centres:

1. Energy: Australia has access to abundant energy which is critical for power-hungry data centres. In the past, coal was the dominant source of electricity, but today around 34% of Australia’s electricity comes from renewable sources, and that share is growing fast. This does not even include possible future energy sources such as green hydrogen. In contrast, 94% of Singapore’s electricity comes from imported natural gas.  

2. Skilled labour force and world-renowned universities: Australia boasts highly skilled IT workers and private sector companies that have developed expertise in data centres with the rise of 5G and remote work. Our universities rank among the best in the world and attract talent from throughout East Asia. Strong government support of research has led to past breakthroughs in quantum computing, solar cells, and network technology.

3. Strong and well-regulated economy: Australia’s economy grew for 30 years without a recession until the COVID-19 pandemic. Although the 2008-09 global financial crisis took its toll, Australia’s well-regulated financial system did not suffer the bank collapses of the USA or Europe. Australia is also politically stable, with its preferential voting system ensuring governments from the centre of politics.

4. Land: While land is tight in Australia’s largest data centre hub of Sydney, Australia still has a space advantage compared to countries with less land and higher population density such as India, Japan, and Singapore. Melbourne is less constrained than Sydney and is expected to emerge as Australia’s leading data centre hub (see chart below).

5. Proximity to Asia, the Middle East, and the Pacific: Australia seems like it's far from anywhere, at least far from many geopolitical hotspots, but it sits in the middle of undersea cables that connect from Oman in the west to Thailand, Guam, and Japan in the north, and New Zealand and Hawaii in the east (see chart below). Google has been laying new cables near Australia’s Christmas Island (twice as close to Singapore than it is to Darwin or Perth) and is planning to build a “connectivity hub there”.

6. Water: Data centres also require large amounts of water for cooling. Australia may be the second-driest continent after Antarctica, but unlike the Middle East, most of Australia’s drinking water comes from rainwater, not expensive desalination. Further, over the last decade, Australia has experienced six years of the La Nina weather system with associated higher levels of rainfall.

Favourable status with the US:  In this era where national interest and technology are tightly interwoven, Australia’s strong relationship with the US provides it with access to the best technology. Australia’s unrestricted tier-one access to AI chips and model weights under the AI Diffusion Framework is a prime example. While the US has announced a tightening of the framework, Australia is still expected to receive preferential treatment. 

The amount of investment in Australian data centres also shows the attractiveness of Australia (see chart below). Microsoft has three Australian data centres and is building three more, Google is planning a AUD 20 billion investment, and Anthropic has opened up an office in Australia and its CEO recently met with Australian ministers.

Australia has also seen the emergence of a strong domestic data centre ecosystem, with local operators playing an increasingly important role in supporting capacity growth and attracting global investment.

The opportunity to become a regional hub

Australia’s data centres have developed around its major cities; close to universities and leading companies. Now, Australia has the opportunity to establish itself as a regional hub for data centres.

While large Asian cities will require their own data centres to minimise latency for AI inference and applications such as self-driving cars, AI training does not require data centres to be close. Australia’s unique mix of strengths, including its proximity to Asia, could see it emerge as a hub for AI training.

“Data centres are the backbone of the digital economy, and we need to recognise their importance to ensure Australia’s place in the AI boom.” Nishi Vissamraju, NextDC, head of Sustainability.

Melbourne and Sydney should also aim to become global centres for AI research, infrastructure, and best-practise. They should look to the data centre cluster around Ashburn, Virginia as a model. As Detroit and Silicon Valley shows, leading centres for an industry can create a cluster of companies and research that become self-reinforcing and an economic powerhouse.

Final thoughts

Australia has made an enviable start with data centres, but now must lever its strengths to become a regional hub. As AI eats the global economy, the rewards of becoming a regional hub could be enormous. Alternatively, failure could relegate Australia to technological dependency where AI models are trained and kept offshore.

“We know that we have to lean in to capture the economic opportunity of artificial intelligence for Australia. We will be a poorer nation if we do not do this.” Andrew Charlton, member of parliament for Parramatta, NSW.