Australia’s need for data centres is largely a settled question. Cloud services and AI run on them, and there is no shortage of investment or political will behind them. Where they go and on what terms is far less settled. Three questions stand out: what must be protected in the areas in which they’re built, what lasting value should the host community receive, and who governs how these decisions are made.
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In the New South Wales Southern Highlands, one community has just put forward its answers. On Sunday 25 October, residents presented their federal, state and local representatives with what is believed to be Australia’s first deliberative model on data centres. It came out of A Better Model for Data Centre Development, a community-led pilot in Wingecarribee Shire.
Four partners shaped the work. Highlands Homegrown Economy, a community initiative co-convened by local climate group WinZero, provided local knowledge and networks.
Regen Labs, a place-based economic development lab, prepared tangible examples of community wealth-building around major infrastructure projects and fed what residents agreed on into the model. RadicalxChange, a global participatory governance foundation, designed and ran the deliberation, using civic technology. BWD Strategic provided an independent four capitals assessment to help inform community discussions.
One key challenge with current data centre proposals is that they usually arrive with one number: the capital required to build them. That figure says little about what a data facility extracts from a place, or what it could leave behind.
Using the Capitals Coalition’s Integrated Decision-making framework, the assessment looked at how a data centre affects other kinds of capitals such as air, water and land (natural capital), people and communities (human capital) and relationships, rules and institutions (social capital).
The research drew on more than 70 sources, from global nature and social equity disclosure guides to NSW ecological datasets, and used NSW data centres that have already been approved as reference points.
Communities have not been a focus in data centre development.
The ”four capitals assessment” framework evaluated how a data centre would affect the natural, human, social and economic resources that the people of the Southern Highlands depend on. And then used the findings to inform the community deliberation on what value they want to protect, and what value they want to build, in their community.
This is precisely the discussion communities deserve to have before the terms are set, not after.
Over two months, on the open-source platform Pol.is, 158 participants cast 4901 votes on 167 statements. A representative group of 38 also used “quadratic voting” to rank 13 demands, alongside a discussion group of locals with diverse lived experience, including First Nations community members, people with disabilities, carers and youth workers.
Clean, renewable energy was the top priority in the vote and in the Pol.is deliberation, followed by water-efficient cooling, and third, ensuring an ongoing community benefit, with a binding say in how it is spent.
The need for independent environmental assessment throughout the life of the project ranked fourth in community concerns and included monitoring pollution, noise, and impacts on community health.
Ninety-eight per cent of participants agreed that future large developments should contribute to a community investment fund, with community governance of how it might be spent.
The top demands for clean, renewable energy, water-efficient cooling and ongoing community benefit already have precedents. The 300 MW Walla Walla solar farm near Albury reached financial close on the back of a 15-year power purchase agreement with Microsoft. In Lancaster, Pennsylvania, the city signed an agreement that requires clean energy and closed-loop cooling, and the establishment of a binding community benefits scheme, backed by a US$20 million letter of credit.
Building on these foundations of informed community deliberation, the Southern Highlands’ Better Model for Data Centres has seven core principles: clean power, smart water, a circular and local economy, transparency and accountability, fair value, community leadership and respect for those who remain opposed or sceptical.
The model also sets out what the community could do, how the process could work and who needs to be involved to make it work.
“This process shows what’s possible when people have a constructive way to engage,” said Jess Scully, executive director of RadicalxChange. “Whether they agree or disagree, the process builds connection and helps them find what they hold in common. If built into Australia’s national standards on data centres, a process like this could transform how we define ongoing community benefit and social licence wherever an investment is proposed.”
A full blueprint of the model will be released in November. The timing matters. National Cabinet is developing national data centre standards around energy, water and land. NSW has introduced a fast-track approval pathway, and the Senate inquiry into AI and data centres reports in March 2027. Each will shape the terms for the next wave of data centres, and the Southern Highlands has shown how a community can put its answers forward first.
