US rejection of data centres is a warning for Australia — and maybe leverage - ABC News & Headlines – Australian Broadcasting Corporation

Data centres and AI are already becoming politically fraught topics in Australia. (ABC News: Norman Hermant)

It's hard to imagine that someone was a bigger loser than the Republican Party in yesterday's US midterm "blue wave".

But somehow, things went even worse for the data centre industry.

When data centres were on the ballot, they overwhelmingly lost. There were about 41 different proposals put to voters in ten states, and all but one are on track for a loss for data centres.

An upset in the Texas governor's race saw Democrat Gina Hinojosa sail to victory. This puts Hinojosa, who has called for a ban on data centre construction, in charge of a state that currently has the biggest pipeline for data centre construction. If the ban is carried out, this will likely put a big dent in national construction.

Less directly but perhaps more consequentially, it's also cemented data centres as a politically toxic issue.

Five per cent of all political ads on TV mentioned data centres, and the majority of them were negative. It was an even bigger proportion in states that have become hot spots for data centre construction — the topic was covered in as many as 14 per cent of all political ads in Wisconsin.

An exit poll of voters conducted by NBC News found that three-quarters of voters oppose the construction of data centres in their community. More than 50 per cent of them said it was a crucial issue or major issue in their vote.

The Raging Grannies protest data centres and power hikes in North Carolina, US.  (ABC News: Bec Symons)

Admittedly, data centres weren't the biggest issue overall. Corruption, cost of living, immigration and the Iran War all rated higher. But to keep things in perspective, data centres were not a political issue just two years ago.

I mean this literally: I couldn't find an exit poll that even asked voters about data centres. Nor can I remember a time that a technology issue was so front and centre for voters. (It feels a bit like a cursed monkey's paw somewhere just put one, shrivelled finger down for those who were hoping more people would pay attention to AI.)

By the end of the 2026 midterm elections, data centres had become a bipartisan issue with candidates from both major parties opposing their construction.

(As always, US President Donald Trump was iconoclastic in his increasingly lonely but still vocal support for data centres and his rebranded "super intelligence".)

There will be a lot of ink spilled on what voters were actually rejecting in this data centre repudiation.

Was this motivated by environmental concerns? NIMBYism? The industry's significant contribution to inflation? Is the opposition to data centres a proxy for opposition to AI — obviously intrinsically intertwined as its physical manifest — or the impact of big tech itself?

More broadly, was this white collar voters experiencing a new type of economic anxiety because they fear their roles could be automated using data centres?

It's obviously some combination of the above, but the proportions will matter a lot.

One group keenly watching this result is Australia's political class.

It's not surprising that people who walk the halls of parliament are political sickos like many of us, but they're also certainly taking note of the data centre issue with an eye to what it means for us, here.

We should heed a note of caution against trying to directly transplant the midterm results to our political environment.

Australia is not America in a lot of ways, including when it comes to data centres. We've definitely seen an explosion in construction and proposals for a new generation of bigger, hungrier data centres, but the scale of our build out pales in comparison to our American friends.

The combined capacity of Australia's existing 163 data centres is about 1.6 gigawatts, according to Data Centres Australia. America has about 30 times that, at around 50 gigawatts of capacity, by one estimate.

Our biggest data centre, AirTrunk's MEL1 in western Melbourne, is ten times smaller than the known capacity of Elon Musk's monstrous Colossus 2 (which was reportedly powered for a while by gas turbines without environmental permits, thanks in part to the laxer rules in the land of the free — another difference between our contexts).

Nor is the opposition to data centres here quite at the level of the American backlash. Recent polling found that 44 per cent of Australians would oppose a data centre built near them — not a great number for the industry, but not quite like the 76 per cent of Americans in exit polls.

Another major difference? Australia has a bipartisan consensus from the two major parties on data centres, but in the opposite direction.

Just last month, the chairs of the parliament's joint inquiry into AI — Labor's Jo Briskey and the Liberal's deputy chair Jonathon Duniam — took the unusual step of sending a letter mid-way through the inquiry's investigation to give an "early indicator" of what they'd found.

Shadow Home Affairs Minister Jonno Duniam and Labor MP Jo Briskey are co-chairs the Joint Select Committee on Artificial Intelligence.  (ABC News: Matt Roberts)

It outlined several things that would be required to get the top AI companies doing their "training" here — a goal that Prime Minister Anthony Albanese has also explicitly stated is an objective of his government.

Translation: Australia wants AI companies to build big data centres here.

Now, the Australian politicians, staffers and those in the data centre industry who I spoke to about the midterms aren't completely terrified by the result.

They're very aware of the existing political stigma around data centres. Many of them expect that this result, even though it's in a different context, will embolden anti-data centre organisers, who are already fresh off a few wins in the last few weeks.

But there is a sense that it's possible to avoid this kind of response if we can thread the needle of attracting AI investment — again, this means building data centres — if we do it on, in their words, "our terms".

This is the motivation behind the government's proposed new rules for data centres that are expected to be released by the end of the year.

There are proposals for data centres in many places across Australia. This artist's impression shows one proposed for near Wagga Wagga, NSW.  (Supplied: CDC Data Centres )

There is one other interesting downstream impact of a cooling data centre industry in the US.

With an American data centre slowdown, the computing crunch on major AI companies who are already fighting amongst themselves for resources will get even worse. This means there's even more pressure to look outside of the US. And guess which country is high up on many of the top AI companies' wish lists?

Australia is in a small group of dream destinations for major AI companies, and our leverage just grew. This could mean we can negotiate more from a tech industry increasingly desperate for a new place to call home: more money, stricter rules, a greater say over how they run — it's all on the table.

That must be an enticing thought for politicians already banking on extract concessions from these companies to piggyback our own AI industry and to jump-start our economy.

But there's probably another question itching at the back of their minds: Is this febrile feeling by the electorate towards data centres a cautionary tale that we can avoid? Or if our government's goal to lure major AI companies down here comes true, is it our political destiny?