Victorian councils' peak body seeks statewide pause on data centre approvals

Victoria's 79 councils, speaking through their peak body the Municipal Association of Victoria (MAV), are asking the state to stop approving any new or enlarged data centres. The resolution was passed at the MAV's October State Council meeting, and it seeks a pause until a comprehensive planning and environmental framework is in place. The vote came days before the government enters caretaker mode, which starts on the Tuesday after the 30 October 2026 report, ahead of the 28 November election.

Eight councils, among them Melbourne, Geelong, Maribyrnong and Hume, put data centre motions to the meeting. A second motion asks for tighter regulation of the social, economic and environmental effects of data centres, including their use of land, energy and water. Melton, Brimbank, Maribyrnong and Hume had each asked earlier in the year for an immediate pause.

The councils' chief complaint is the state's Development Facilitation Program, which lets a data centre judged significant economic development go straight to the Planning Minister. Councils say this leaves them close to a mere referral agency on projects that affect industrial land, power networks and, in some cases, housing supply. MAV president Jennifer Anderson said the program takes powers from councils and communities, and that councils want a genuine partnership with the state. At a Senate inquiry in September, Melton's director of city futures said every data centre application in the municipality had used the state pathway, while Brimbank said the state was assuming assessment whatever the size of the project.

The government announced new data centre rules in September. They prohibit facilities in residential zones and near schools, set a buffer of about 150 metres from homes, and require renewable energy and non-drinking water. A government spokesperson said data centres must supply their own energy so household costs do not rise. Councils respond that the policy gives them too little local involvement and contains no pause on approvals. The Liberal and Nationals say they would direct data centres to designated precincts away from homes, while the Greens want a moratorium on new AI data centres and compensation for affected communities. Anderson accepted that the government has little room to act in caretaker mode, so the MAV intends to lobby all parties before and after polling day.

Several projects sit behind the debate. NextDC paid about $165 million for 169 hectares at Lovely Banks near Geelong, with the purchase settling in June, on land that had been marketed with scope for up to 2,105 homes. NextDC has not announced a build there. Its M3 campus at West Footscray is planned at 225MW, with 60MW built at 30 June 2026, and Jemena paused parts of the related 66kV network upgrade after resident protests. NextDC removed about $140 million from FY27 guidance and its shares fell roughly 40 per cent, and the Stages 6 and 7 expansion remains in the DFP with a decision now expected in 2027. The $2 billion, up-to-150MW M4 campus at Fishermans Bend won the Planning Minister's approval in January through the DFP after 75 days. GreenSquareDC says its planned MEL1 campus at Spotswood could offer up to 240MW of IT capacity, and it lists 2027 as its operations target.

For operators and their backers, the danger is delay rather than prohibition, because power and permits must arrive on a timetable that fits customer contracts. Owners of sites that already hold permits and secured grid capacity could end up better placed if rules tighten.