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A proposed large-scale data centre near Kogan west of Dalby could transform the Western Downs as Australia seeks to capitalise on artificial intelligence. The development would require substantial land, energy and infrastructure investment, while the Reserve Bank has raised interest rates to 4.6 per cent and warned that AI-driven investment could increase global prices alongside energy and geopolitical risks.
TOM HARTLEY, REPORTER: For generations this agricultural region has known AI to mean artificial insemination. But now a cow paddock, west of Brisbane, could be at the frontier of a very different kind of AI as Australia races to capitalise on the new tech amid cries for caution.
Building AI means building data centres and spending tens of billions of dollars in the process and now the Reserve Bank and economists are wondering how that sudden rush and that spike in spending is going to impact our economy. This afternoon, the RBA lifted the cash rate again to 4.6 per cent. Identifying three risks including the indefinite conflict in the Middle East; rising energy and fuel prices and investment in AI driving up global prices.
MICHELE BULLOCK, RESERVE BANK GOVERNOR: The AI boom yes, it's certainly having an impact. It’s have an impact on demand here, overseas so I wouldn't say it's sort of definitely materialised yet but I'd say the risks are building there. West of Brisbane is the Western Downs: its highway towns and farming land is home to 35,000 people, sprawling 38,000 square kilometres.
So we're on the side of the road in what a lot of people would consider to be the middle of nowhere but you would say there's a fair bit going on here. ANDREW SMITH, WESTERN DOWNS MAYOR: We're really close to a 24,000 cattle feed lot, three gas fired power stations, a solar farm, and a battery application as well – a large-scale battery. It's a pretty good place to be doing industrial activity in a rural area.
TOM HARTLEY: And it's that very feedlot here at Kogan, west of Dalby that could become the site of Australia's largest data centre development. ANDREW SMITH: The site is around 750 hectares and obviously their plans are that they have access to the power stations that we see right here. But that application is still in with council.
Our planning team are working diligently as they always do to have a report for us, and to answer a lot of the questions that the community are bringing forward. TOM HARTLEY: The proposal was lodged last month by Singapore's Zerra DC envisioning four halls, built in four phases, over about four years. Are you worried you're getting swept up in the hype of this rush to construct data centres?
ANDREW SMITH: I think what's really important is that we stay in our lane and we address what we can address, which is the planning application in front of us. We can be accused of having an open door to, to anything, but it is about having good development come to our region. Okay, Kogan is, according to the maps that I used AI to track, 30 minutes away from your place.
Why do you care about something that's 30 Ks away from your actual property? DR SHAY DOUGALL, RESEARCHER: Yeah. Um, it's the scale and the magnitude of this industry, this new industry, and that particular project, its impact is not going to be just on one property. The impact is going to be community wide.
TOM HARTLEY: Shay Dougall earned a PhD researching the localised impacts of the last industry to boom in her region - coal seam gas. SHAY DOUGALL: It is absolutely very well documented that there was absolutely a boom and absolutely a bust, and that bust was pretty harsh. TOM HARTLEY: It brought thousands of workers and a surge of spending almost overnight, but the influx of cash, construction, and people peaked four years in.
SHAY DOUGALL: What you prevent a boom and bust outcome with is planning and determining those problems upfront. TOM HARTLEY: The proponents estimate the data centre project would create 1,500 construction jobs each year during the build. At full capacity they forecast more than 1,400 direct operational roles, and more than 2,000 indirect jobs in the wider community. Are you worried about the promises being made when it comes to work force and those numbers?
The other thing which was always important was to understand that construction is only a period of time. TOM HARTLEY: There are more than one hundred data centre projects in the pipeline, nationally – drawing skilled labourers in high numbers. If start with the building itself, you’ve the slab, the structure, the roof. That means concreters, steel fixers, crane operators, carpenters, thousands of tonnes of concrete and steel.
Then you've got power. That means substations, switching stations, high-voltage connections, batteries and that's a job for electricians and specialist electrical trades.
Next, you need industrial-scale cooling - often that means water and pipework to run it – so that's mechanical trades and plumbers. Finally, the fit-out. That’s racks, cabling, servers and that means data and communications technicians. With so many on the cards - economists estimate data centre developments could bring more than $150 billion in investment to Australia, over the next five years.
JAKHONGIR KAKHKHAROV, AUSTRALIAN CATHOLIC UNIVERSITY: Huge amount of money flowing into the country, it's always a problem. Monetary aggregates increase and that will put inflationary pressure.
MICHELLE BULLOCK: There's a lot of investment going on in data centres obviously - a lot of that is imported so it's not impacting demand in Australia, but some of it's not and building data centres, the need for tradies, those sorts of things, materials, is actually impacting and construction is an area we know is under pressure. TOM HARTLEY: Construction forecasts warn demand for workers could peak at the same time as major building and engineering projects fuelling inflationary pressure.
DENITA WAWN, MASTER BUILDERS AUSTRALIA: If you do not get all those trades working in a domino effect one after the other then delays are incurred and therefore costs increase and of course, the cost of labour is also higher as well because of that lack of supply. So, it's a double whammy. KIM HETHERINGTON, CONSTRUCTION SKILLS QUEENSLAND: We talk about this as like a super cycle.
It's different from the mining boom that we saw back in that mid-2014, ‘15, ’16. TOM HARTLEY: The mining investment surge of the early 2010s helped carry Australia's economy, boosting national income and investment but it also pushed up wages and costs outside the resource regions, splitting the country into two speeds. JAKHONGIR KAKHKHAROV: It's very difficult to predict exactly what will be the outcome because this is definitely a unique phenomena.
DENITA WAWN: We need to substantially increase our labour force and that is a twofold approach. One is increasing greater number of apprentices in the system and the second is increasing skilled migration of tradies. TOM HARTLEY: In Queensland, the construction pipeline was already crowded before the inflexible Olympics deadline was introduced. Several major venues and facilities must be built before the torch arrives in 2032.
KIM HETHERINGTON: Any type of project that we add to the pipeline increases the challenges that we have around cost, around raw materials and supply chain, and of course our workforce. MICHELE BULLOCK: There possibly is productivity gains. When, I don't know but I think all countries are grappling with the same issue, so you do have a bit of an issue potentially in the short to medium run about how this all plays out.
ANDREW SMITH: My belief is that when you have a development in your region or an industry such as ag or energy, the whole region benefits. SHAY DOUGALL: Queensland seems to keep producing lessons from these experiences, but don't seem to be applying them before the next wave of development comes through.
And yeah, this is a really good opportunity for us to stop and take a deep breath and really strategically think about what do we want - nationally, as well as regionally. Most of the noise around AI is about the technology, how fast it is moving and whether it should be slowed down. But the rush to build the infrastructure behind it raises another question: could the AI boom add to inflation and the cost of living? Tom Hartley reports.
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