Anthony Albanese will seek to use Wednesday’s high-stakes talks with premiers to quell growing unhappiness about national controls on datacentre developments, promising new approval laws will complement state rules.
Faced with growing opposition from conservative governments in Queensland and the Northern Territory, Albanese will tell national cabinet he plans a major piece of legislation next year to ensure the economic benefits of AI are shared widely.
With potential to be one of the major reforms of Labor’s second term, the new law will set tough copyright rules for AI businesses and impose standards for security, safety and skills development.
The meeting on Wednesday will come after the latest forecast from the Australian Energy Market Operator showing datacentre power use is projected to increase seven-fold over the next decade.
The industry’s rapid growth, driven by increasing reliance on AI and cloud computing, remained one of the most significant causes of growth in electricity demand, according to Aemo’s annual Electricity Statement of Opportunities.
In addition to 165 datacentres already operating around the country, a further 225 are in development, the report showed, reflecting a substantial increase in new proposals compared to 2025, Aemo said on Tuesday.
Datacentre electricity demand was expected to grow from 5 to 34 terawatt hours by 2035-36, the report said, growing from 3% of overall consumption to 13%.
AEMO said high datacentre growth could see consumption reach 52 TWh – a 10-fold increase over the decade.
But there were high levels of uncertainty, with more than a third of projects listed in 2025 since cancelled, and operating facilities taking years to ramp to full capacity.
Daniel Westerman, Aemo’s chief executive, said record levels of new generation and storage coming online had improved the outlook for reliability, even with the expected retirement of coal power stations.
“The reliability outlook has improved, supported by record levels of new generation and storage, and a strong pipeline of projects expected over the next decade.”
The Climate Council chief executive, Amanda McKenzie, said datacentres were set “to devour an enormous share of Australia’s electricity in the coming years”.
“We’ve got one shot to get the rules right now and ensure that datacentre growth doesn’t strain our grid and push up pollution.”
Albanese will use national cabinet to strike agreement on a plan to legislate nationally consistent minimum obligations for datacentres, requiring them not to push up energy prices, meet their own infrastructure costs and minimise water use.
The rules will also require developers to minimise the effect of new datacentres on local communities, ensuring they are appropriately sized and appropriately located, away from homes, schools and potential housing or agricultural sites.
Projects approved for development before the new rules come into place will only be subject to existing state and territory laws.
Last month, the prime minister promised “the strongest possible protection” for Australian creatives against misuse of their work by artificial intelligence models. He said it would be “theft” if writers, artists and musicians didn’t have control of their work or receive payment for its use in training large AI models.
Combining the elements into a single piece of legislation signals the government’s ambition on AI, but could also heighten the political risk of getting the bill through parliament ahead of the next election.
Queensland premier David Crisafulli and the NT chief minister, Lia Finocchiaro, have signalled opposition to federal rules requiring datacentres to be powered by renewable projects at the exclusion of coal and gas.
Albanese is expected to seek broad consensus, but could be challenged by the increasingly outspoken Liberal-National and Country Liberal party leaders.
He will also discuss state opposition to the national gun buy-back, which only has support from New South Wales and the ACT so far. Action to curb violence against women and the growing H1 bird flu crisis are also on the agenda.
Anger about Western Australia’s favourable GST share will also flare. In Perth on Monday, Albanese said he would not change the deal, which costs taxpayers more than $6bn a year.
“There will be no change to WA’s GST arrangements while I’m prime minister,” he said.
Promising Australia would do more to unlock frontier AI development in the future, Albanese will tell a Business Council event on Tuesday the government was determined to succeed.
“It will advance our national sovereignty. And it is essential for our national security, business productivity, science, innovation and resilience.”
