Australia to establish government AI office, curb data centres' water use
FILE PHOTO: Australia's Prime Minister Anthony Albanese gestures during a press conference, in Sydney, Australia, June 18, 2026. REUTERS/Hollie Adams/File Photo
SYDNEY, July 15 : Australia will create an office at the heart of the government to manage the development of artificial intelligence standards and force data centres to be net producers of energy and limit their water usage, Prime Minister Anthony Albanese said on Wednesday.
The "Office of AI" will be established within the Department of the Prime Minister and Cabinet and ensure a whole-of-government approach across different ministries.
"Up until now, our response has been issue-by-issue, sector by sector," Albanese said in a speech in Sydney on Wednesday.
"This is our time to decide what AI looks like here in Australia. It is not a question of if or when AI will transform our economy, we are past that."
The approach is a world-first and will enhance Australia's appeal as a destination for AI investment by providing more clarity for approvals and a more streamlined compliance process, Albanese said.
"Our Australian standards will also set clear rules for large data centres: where they are built and the power and water they use," he said, adding that legislation would be introduced in Parliament early next year.
The announcement comes as Australia seeks to position itself as an AI leader and a global hub for data centres, while facing calls for tougher regulation as the technology spreads through the economy.
Concerns are growing that AI will lead to job losses and higher energy costs, infringe on safety, security and intellectual property, and harm the environment through the expansion of data centres that require vast amounts of water.
"The AI-driven surge in data centres will have a profound effect on our energy system, and unchecked, this growth could mean soaring prices and rampant climate pollution," said Amanda McKenzie, CEO of the Climate Council think tank.
Australia currently does not have any specific AI laws, and instead relies on a range of privacy and consumer protection laws as well as a voluntary AI ethics framework.
