Australia’s data centre build-out carries risks for the economy – and inflation

The Conversation , CC BY-SA Australia is in the middle of a data centre construction boom.

Driven by artificial intelligence (AI) and growing demand for digital services, global technology companies are expected to invest up to A$150 billion in Australian data centres by 2030.

The scale of the investment is hard to ignore.

However, a more important question is whether Australia will benefit from higher productivity and economic growth, or simply from a brief construction boom.

Data centres can create jobs, strengthen digital infrastructure and support AI development.

But they can also put pressure on housing, electricity networks and skilled labour.

Data centres have existed for decades.

But something has changed, and this essential infrastructure is now at the centre of a major policy debate.

This article is part of The Conversation’s series on data centres – what they are, why we need them, and why they’re suddenly so controversial.

Why is Australia a favoured location? Data centres are packed with computers that store, process and move digital information, the backbone of cloud computing.

In theory, they can be built anywhere, so why does big tech have Australia in its sights? Australia offers several advantages for global technology firms.

It is politically stable, has strong institutions, and sits close to the fast-growing Asia-Pacific region.

The direct economic benefits are significant.

Construction projects create work for engineers, electricians and builders.