Australia's federal and state governments should enact moratoriums on data centre development until Canberra implements its planned national standards for such digital infrastructure, Sydney and Melbourne councils have told a parliament inquiry while citing "significant concerns" for their residents.

Local councillors and data centre developers AirTrunk and Goodman Group took part in a Senate committee hearing in Sydney on Tuesday, examining AI and data centres.

Rochelle Flood, the deputy mayor of Lane Cove Council in Sydney's north, said her team has "significant concerns" about accelerating data centre development, and suggested an "ill-equipped" planning system is not guaranteeing that hyperscale infrastructure is built away from residential and environmental areas.

She said Lane Cove Council has "huge concerns" over a data centre proposed in its jurisdiction by Goodman Group, one of the largest industrial property developers in the world.

The proposed development, known as Project Mars, would have an electrical substation around 16 metres from land that is currently used for low density residential housing, according to planning documents.

"We currently have a hyperscale data centre in the planning pipeline that is approximately 16 metres to the nearest home and 160 metres to a local primary school," Flood said.

"It backs onto bushland, adjoins Lane Cove River, and will overshadow our local community nursery."

Lane Cove Council lodged a formal objection to the Goodman proposal in April, said Flood, who suggested the company had "refused to engage with the community in any meaningful way".

While some councils said they are not opposed to data centres and their potential economic benefits, a larger number voiced concerns about energy and water usage, noise generation, impacts on the workforce and the environment, and the levels of consultation undertaken by data centre companies.

Flood urged the federal government to support a moratorium on data centre developments until strong national planning regulations are in place.

"Without a moratorium, communities and our environment will be left dealing with the impact of poorly planned data centres for years to come," she said.


The location of Goodman Group's proposed data centre in the Sydney suburb of Lane Cove. Image: Nearmap / Goodman document

Senator pushes Goodman to kill Lane Cove plan

Ben McGilp, general manager of development at Goodman, told the inquiry that the company had directly consulted with the local community, and had taken part in "informative" and "intensive" discussions.

He admitted during Tuesday's hearing that Goodman's proposed Lane Cove data centre would be "very close" to nearby homes.

"I think it's 20 metres, from memory," he said.

Goodman has previously stated the development would be around 50 metres from nearby residents.

Liberal Senator Sarah Henderson said she was "appalled" by Goodman's proposed development.

She suggested its proximity to residents would be unacceptable, and asked McGilp and Goodman to formally withdraw the plan.

"This is a wholly unreasonable and frankly grossly irresponsible proposal, which shows contempt for local residents," she said.


Liberal Senator Sarah Henderson says she is 'appalled' by Goodman Group's proposed data centre in Lane Cove. Image: YouTube

McGlip said Goodman expects to make "some form of design change" to the project given "a difference of opinion" with the community, before the company decides by the end of the year "what happens next with this development".

"I think from our perspective, the challenge for us right now is to determine how to marry what we thought was a complying development with what the community obviously thinks is not," he said.

Councillor Heather Champion from Wingecarribee Shire Council in the New South Wales Southern Highlands said her council also wants "a moratorium on approvals until regulations are in place".

"Ten years from now, we don't want to look back and realise that we got this wrong because governments failed to act with the urgency that this moment demands," she said.

On Wednesday, Victoria's Maribyrnong City Council, Hume City Council, Brimbank City Council, and Melton City Council all called for moratoriums on data centre development until federal regulations are in place.

The mayor of the City of Maribyrnong, Mohamed Semra, told the inquiry, “The technology is moving quickly – our planning framework needs to catch up.

"We can support Australia’s digital future without asking the same communities to continually absorb the cost of that growth."

Government considers setting minimum distance from homes

Several Sydney and Melbourne councils told the inquiry the federal government should mandate significant buffer zones between data centres and residential housing.

The possibility of a "mandatory minimum distance" away from homes and schools was raised in a consultation paper released by the federal government last week, as it plans national data centre rules for 2027.

The consultation paper also asked for advice on "which level of government is best placed to issue and administer location requirements".


Goodman's Carl Bicego (left) and Ben McGilp (centre) appeared virtually on Tuesday, while AirTrunk's Tom MacKellar (right) appeared in person. Images: YouTube

Tom MacKellar, vice president of origination and market expansion at AirTrunk, told Tuesday's committee hearing that the Victorian government's plan to mandate a 150 metre buffer around data centres "feels appropriate to [AirTrunk] as a measure".

He said all of AirTrunk's existing and planned Australian data centres were more than 500 metres away from residential areas.

Councils also suggested to the committee that the government's national rules on data centres should be retrospective and apply to all relevant developments, both planned and existing.

Tanya Taylor, the mayor of Willoughby Council and president of the Northern Sydney Regional Organisation of Councils, said, “We're worried about the approvals that are have been given already, and they're not going to need to abide by any of the new rules.”

The parliamentary inquiry is currently scheduled to table its final report on 16 November.