Data centres in Sydney are forecast to use up to 250 megalitres of water a day by 2035!

Today during Question Time, Abigail asked the Minister for Water what actions they are taking to ensure a more responsible approach to AI and data-centre development.

Abigail said:

My question is directed to the Minister for Water. The latest Independent Pricing and Regulatory Tribunal [IPART] determination for Sydney water prices notes that Sydney Water estimates that the water needs of data centres may be up to 250 megalitres per day by 2035 to fuel the explosion of artificial intelligence products. That would be almost 20 per cent of Sydney Water's total water usage being consumed by data centres. Given that Sydney Water has expressed serious concern and warned about needing to pause new developments in Macquarie Park due to water supply constraints because it is an area with high data centre activity, what is the Minister doing to advocate for a more responsible approach to artificial intelligence and data centre development so that new infrastructure, like water connections, is appropriately prioritised towards housing and is not fuelling the latest tech bubble?

The Hon. ROSE JACKSON (Minister for Water): I thank the member for her question. She is right to indicate that IPART has noted those concerns in its determination. It also noted that Sydney Water has not, at present, prioritised capital investment to support data centre development in its long-term capital plan. Sydney Water has been clear that its investment priority is in supporting the New South Wales Government housing targets. That is reflected in its long-term capital plan that has been welcomed and approved by the Government and shareholder Ministers.

The Government is having collaborative conversations with Sydney Water and energy providers because some of the pressures that the member has identified in relation to water also relate to energy and ensuring that New South Wales is open for business and supporting the future economic needs of the tech sector. We want New South Wales to be a place where investment occurs so that we are at the cutting edge of emergent technology, and we can take advantage of it. But Ms Abigail Boyd is absolutely right to identify the pressures on things like water and energy. They are part of the consideration being led by Infrastructure NSW, and it takes a collaborative approach to ensuring that all of those different pressure points are considered.

Sydney Water is exploring a number of innovative opportunities to ensure that data centre development can be supported without putting pressure on the prioritised capital delivery for housing. That is new and emergent work. It is worth noting that the water needs of some data centres are up for discussion as technology improves. I hope this gives the member a sense that the issues she has raised are on the agenda for the Government and Sydney Water, but it is clear that the current capital plan is focused on prioritising housing delivery.

Abigail went on to ask a supplementary question:

I thank the Minister for her frank answer. Similarly to when I asked the Minister for Energy what was being done about the massive energy usage forecast for data centres, it is important that we continue to put data centres on the agenda. Otherwise, they will be overlooked, and we will end up keeping Eraring Power Station open longer while people bear the brunt of higher water prices because we have not considered water. I think we need to comment on the report from the IPART. In that report, IPART stated that there is a possibility that Sydney Water will need to expand its system capacity materially to capture both home connections as well as data centres. In the case that it does that, it would need to consider setting new higher prices for consumers before 2030.

Read the full transcript in Hansard here.

25 November 2025

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