From CommsDay of 16 and 17 July 2026
Our Story of the Week is based on two articles, one in yesterday’s CommsDay and the other in today’s. A big story this week was the Prime Minister’s announcement on the Government’s approach to AI and to data centres in particular. The announcement covered the establishment of the Office of AI in the prime minister’s department and indicated the Government;’s approach to licensing of creative content used in AI models. Yesterday’s CommsDay article is the first reprinted below. The second article reports on the concerns set out by consultants and researchers, Venture Insights, on the dangers of substantially divergent treatment in terms of taxation and general regulatory imposts of major global platforms and their Australian operations compared to terrestrial network operators and infrastructure providers. By the way, there has been a lot of cautionary, adverbial advice on AI policy to the Government from a wide range of divergent and interested sources lately. By “adverbial” I mean not about what to do in AI, but about how to do it and how not to do it. Anxiety levels are high all round when it comes to AI.
Fed government to impose national power and water rules on AI data centres
The federal government will legislate a national regulatory framework for large AI data centres, requiring operators to fund new electricity supply, pay their grid connection costs and reduce consumption when the power system is under pressure.
Prime minister Anthony Albanese said the proposed Australian Standards for AI would go to National Cabinet in August, with legislation expected to be introduced early next year. The standards will combine requirements covering data centre energy use, water
consumption, location, safety, infrastructure and AI training into a single national framework.
The government is seeking to remove uncertainty over the power, planning and water obligations facing Australia’s emerging AI data
centre sector, while ensuring households and other businesses do not subsidise the infrastructure needed to support it.
The standards will build on the government’s Data Centre Expectations released in March and will be mandatory. The government said the framework would be the ϐirst legislated system worldwide to combine large data centre regulation and AI training requirements.
“We will create a legal obligation for the next generation of large-scale data centres to underwrite new power supply,” Albanese said in a speech at the University of Sydney. Operators will be required to fund additional electricity generation and pay their full share of grid connection costs.
They will also need to reduce their electricity use when required to support the power system, minimise water consumption, maximise energy efficiency and fund any additional water infrastructure needed by their projects. The federal government will work with states and territories to determine appropriate locations for large facilities, with local communities to be consulted during the planning process.
Albanese said data centres should become “net-generators, not net-users” by putting at least as much electricity into the grid as they consumed. That would involve supporting new renewable generation and ϐirming capacity, as the government seeks to ensure data centre growth does not increase power prices for households and businesses.
A joint statement from Albanese, industry and innovation minister Tim Ayres and assistant minister for science, technology and the digital economy Andrew Charlton said operators would also need to reduce demand when necessary to strengthen the grid. The government has not yet detailed how that demand-response obligation would operate or whether operators would face minimum curtailment requirements.
T he standards are designed to give the Commonwealth a stronger role in a sector largely governed through state planning systems, electricity market rules, network connection processes and local government approvals. The federal government will work with states and territories to establish a more consistent approvals process and determine where major data centres should be located. Albanese said Australia had enough land to accommodate large facilities without forcing them to compete with housing, but overlapping federal, state and local responsibilities made national standards necessary.
“These location, energy and water obligations take in every level of government and their overlapping powers,” he said.
“Which is precisely why we need national standards.”
The government said the framework would accelerate approvals and streamline the verification of energy, water, safety and other compliance requirements. It will consult industry, local communities and Australia’s trading partners on the
detailed design.
Albanese said the government did not intend to legislate for every potential AI risk, warning that an overly prescriptive regime could deter investment. However, he said Australia needed to establish the conditions for development before projects were built.
“We cannot revisit this issue after companies have built whatever they want, wherever they want, and try and then re-open negotiations,” he said.
OFFICE OF AI: Albanese also announced the immediate establishment of an Office of AI within the Department of the Prime Minister and Cabinet. The office will coordinate the design and national implementation of the standards and consolidate AI policy work taking place across government. It will work with Ayres and Charlton and coordinate policy covering data centres, copyright, consumer safety, productivity, employment, education, defence and national security.
The government will announce its whole-of-government AI consumer safety priorities in coming weeks, building on the recently established AI Safety Institute.
Albanese said Australia should not become simply a “data warehouse” for AI products created overseas. “We can do much more than manage investment in ideas from elsewhere.”
The government wants investment to generate domestic research, technology capability, skilled employment and national security benefits.
Ayres said the standards would ensure AI investment took place on Australian terms and strengthened national resilience, security and the economy.
Charlton said an enforceable “social licence for AI” was necessary to deliver safe and sustainable growth, with beneϐits shared among workers and communities.
Albanese also linked the policy to digital sovereignty, arguing Australia risked becoming dependent on foreign technology companies if it failed to build local capability. He cited the government’s decision to retain NBN Co in public ownership as an example of maintaining national control over essential digital infrastructure.
National Cabinet will consider the proposed framework in August. The government will then consult states, territories, industry, communities and trading partners before seeking to legislate the standards in early 2027.
Grahame Lynch
Venture Insights warns AI plan could hollow out domestic telco and IT sector
The federal government risks hollowing out Australia’s domestic telco and IT sector by imposing heavy regulatory and tax burdens on local companies while giving foreign hyperscalers more favourable treatment, Venture Insights managing director David Kennedy has warned.
Commenting on the Albanese government’s new national AI plan, Kennedy said its proposed AI standards framework failed to address a structural imbalance between domestic infrastructure providers and multinational technology platforms.
“The companies being asked to harden Australia’s digital infrastructure — its telcos and domestic ICT providers — pay the full 30% corporate tax rate, absorb multi-billion-dollar regulatory imposts, and carry the cost of every public-good obligation the government mandates,” he said.
Venture Insights calculated that six major technology platforms paid an effective tax rate of 1.7% on combined Australian income in 2022-23.
Kennedy said the government treated domestic network operators as a “magic piñata” that could be repeatedly tapped for policy benefits without considering the effect on investment. He cited the $7.32 billion spectrum renewal bill imposed on Telstra, Optus, TPG
Telecom and NBN Co, above the $5 billion to $6.2 billion range the industry had expected. Carriers were also being required to support the Universal Outdoor Mobile Obligation despite uncertainty over whether satellite direct-to-device technology would be sufficiently mature before late 2028, he said.
Kennedy noted that Telstra invested $12.4 billion in its mobile network over the seven years to 2024-25, but argued the regulatory environment made a similar future commitment harder to justify. “The government cannot simultaneously demand that domestic telcos fund national digital resilience and extract billions from those same companies through spectrum pricing and unfunded compliance obligations,” he said.
Kennedy said Australian IT, software and AI companies faced similar disadvantages when competing against foreign hyperscalers carrying lower local tax and regulatory burdens. He compared the situation with the decline of Australia’s domestic media industry, where global streaming and advertising platforms entered without equivalent content, licensing, employment or fiscal obligations. Advertising revenue subsequently shifted from organisations employing Australian journalists and funding local content to offshore platforms, with policy responses arriving only after much of the structural damage had occurred.
“The government might now repeat that mistake at scale in the technology sector,” Kennedy said. He warned that a domestic AI and ICT industry facing full tax and compliance costs, but lacking comparable access to compute and capital incentives, would struggle to
compete for investment.
The result could be a sector that was “hollowed out, acquisition-prone and structurally dependent on foreign platforms”.
Kennedy described the net-generation mandate on power as a world-first measure that Venture Insights endorsed “without reservation”.
However, he said energy and water requirements would not solve Australia’s broader AI sovereignty problem, with foundational model intellectual property, semiconductor architecture and much of the application programming interface economy remaining offshore. The framework also lacked measures giving Australian researchers and startups access to domestic computing capacity.
Venture Insights proposed a “Compute Dividend” reserving a proportion of infrastructure for local companies and research institutions.
It also backed a 2% to 3% digital services tax on hyperscaler revenue, estimating it could raise between $660 million and $990 million annually for sovereign computing infrastructure.
Kennedy also sought reform of the Early Stage Venture Capital Limited Partnership program, arguing its $200 million fund cap and $10 million per-company investment limit constrained domestic venture capital. “The red carpet currently rolled out for hyperscaler investment announcements should extend to the domestic builders too,” he said.
Grahame Lynch
IN TODAY’S COMMSDAY (Friday 17 July 2026)
EXCLUSIVE: Australian fibre infrastructure start-up Coretora is planning a new dark fibre corridor connecting emerging data centre and power precincts south-west of Melbourne with the city’s established western availability zone, targeting the first stage for service by early 2028.
Macquarie Data Centres has arranged to acquire a $200 million parcel of land in Sydney to build a technology and engineering campus and a roughly 200MW data centre.
The federal government risks hollowing out Australia’s domestic telco and IT sector by imposing heavy regulatory and tax burdens on local companies while giving foreign hyperscalers more favourable treatment, Venture Insights managing director David Kennedy has warned.
Data Centres Australia has welcomed the establishment of an Office of AI and said an approach outlined earlier this week by prime minister Anthony Albanese could help deliver regulatory certainty for the sector.
Australia has data centre headroom equivalent to 1.4GW, according to a new report from a global think tank. That compares to 1.2GW in the United States and 58.9GW in China, although the report notes it is “very difficult to get a precise number of what the opaque Chinese government will actually do in building out its footprint in coming years.”
Spark New Zealand has signed with Activeport Group to use its Global Edge platform for purchasing and managing telecommunications services in Australia, becoming one of the first international carriers to join the newly launched service.
The Department of Defence has said that first-pass government approval has been granted for the SPA9102 narrowband satellite communications project, with Defence intending to seek second pass approval.
The Australian Competition and Consumer Commission has made a final decision to extend the Superfast Broadband Access Service determination for non-NBN fixed line networks for a further four years until July 2030.
US Federal Communications Commission Chair Brendan Carr has circulated a proposal that would support direct to device connectivity for so-called unlicensed devices, providing access to 225MHz of unlicensed spectrum for D2D services. Part 15 of the regulator’s rules covers unlicensed wireless devices such as Wi-Fi and Bluetooth transmitters, wireless mics and IoT sensors.
Eutelsat has filed an application with the US Federal Communications Commission to deploy a next generation non-geostationary orbit constellation to complement its existing OneWeb network, but makes no move to expand into the increasingly crowded direct-to-device segment.
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