RBA flags AI data centres as inflation and labour risk

By Zara Kincaid · 2026-07-08

A build-out measured in gigawatts

Hyperscale AI data centres are not modest infrastructure. Each facility requires multi-hundred-megawatt power supplies, large-scale cooling systems and high-capacity fibre connections that link into the national grid and telecoms backbone simultaneously. Firms including Anthropic are tendering for over 1 GW of Australian capacityverifiedVerified Source: cyberdaily.au, driving a pipeline of new builds across New South Wales, Victoria and Queensland.

That scale of construction demands specialist labour and imported components in quantities Australian supply chains have not previously been asked to provide for a single technology category. The squeeze is now registering inside the Reserve Bank's own monitoring systems.

What the RBA has actually said

Reserve Bank board minutes dated 3 February 2026 recorded that business investment was surprisingly strong in the September 2025 quarter, driven particularly by investment in data centres.^[1] That reading set the context for what followed over the next four months, as data centres shifted from a footnote in economic liaison to a named pressure point.

At a Q&A session on 12 February 2026, a Monetary Policy Board member was direct about the mechanism. "Certainly we can see very clearly that there is a very strong demand from, if we're talking tradies... data centres form a big part of that at the moment because they're building a lot of those," the board member said.^[2] The RBA identified data centres as forming a large share of strong tradie demand in the construction sector and feeding into inflationary pressures.verifiedVerified Source: rba.gov.au^[2]

By May 2026, the RBA's liaison network, the bank's structured contact programme with businesses across the economy, was reporting the same dynamic from the ground up. Liaison contacts said construction and fit-out of data centres had remained strong, contributing to higher construction costs that may prompt clients to review forward spending plans.^[3] When construction clients start reconsidering pipeline projects because costs have risen, the inflation generated by one sector begins to slow investment in others.

The June 2026 board warning

The clearest statement came in the board minutes of 16 June 2026. The Reserve Bank board said that strong investment in data centres could exacerbate capacity pressures and skills shortages in other parts of the economy.verifiedVerified Source: rba.gov.au^[4] The phrasing is measured, as RBA language always is, but the underlying signal is precise: a single category of investment is now large enough to crowd out labour and materials from other sectors.

Data centre construction draws on the same pool of electricians, HVAC technicians, structural engineers and project managers that hospitals, housing developments and renewable energy installations need. When demand from data centres is strong enough to sustain premium wages, other projects either slow or cost more. Inflation does not require money printing when it can arrive through a labour queue.

What Australians think of the build-out

Primara Research conducted a nationally representative survey of 1,000 Australians for Airteam, published in July 2026. Eighty-three per cent of respondents said they would oppose having an AI data centre in their local area.^[5] That figure sits well above typical opposition levels recorded for other contested infrastructure categories.

The concerns are layered. Eighty-six per cent of respondents cited worry about AI's impact on employment, 80% flagged noise and air pollution, and 78% raised water demand as a specific concern.^[5] Water consumption is a technically grounded concern: large liquid-cooled facilities can use millions of litres per day, a material figure in drought-prone Australian cities.

Only 16% of respondents believed nearby communities would receive meaningful benefits from AI data centre developments.^[5] Baby Boomers recorded the highest opposition rate at 92.6%, while Millennials recorded the lowest at 75%, still a substantial majority.^[5]

Industry and political responses

Rich Atkinson, Executive Director of Airteam, said the survey findings pointed to a fundamental obligation on developers. "New infrastructure that reshapes communities needs to demonstrate its value to the people living in them," Atkinson said.^[5]

Greens Senator Sarah Hanson-Young framed the issue in terms of democratic consent. "The community deserves to have a say on whether or not they want to become the data centre dumping ground for US-based companies," Hanson-Young said.^[5] Hanson-Young's framing reflects a recurring tension in Australian critical infrastructure debates: foreign capital, domestic land use and local communities with limited formal standing in planning approvals.

Proponents of the build-out point to sovereign digital infrastructure, AI capability and long-term economic productivity as reasons to absorb near-term construction pressures. Whether those gains accrue to communities hosting the facilities, rather than to shareholders and overseas corporations, is the question the Primara Research data suggests Australians have already answered with scepticism. The RBA's May 2026 liaison report was the fourth consecutive monitoring document to name data centres as a distinct economic pressure point.

Zara Kincaid

Zara Kincaid covers AI, search and digital visibility for Bushletter. She writes with technical precision about how these systems actually work.