Latest / Stress Tested / Six Unelected People Now Control The World! - Tim Buckley on AI Data Centres

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Six Unelected People Now Control The World! - Tim Buckley on AI Data Centres · Stress Tested

0:01
Speaker 1: We are talking a seismic shift. We're talking about the
0:04
Speaker 1: biggest investment boom in world history. Six people who were
0:08
Speaker 1: never elected now control the Western world. Who's more powerful,
0:12
Speaker 1: the president of America or the tech bros? The speed
0:15
Speaker 1: of change is unbelievable. And I say that as a
0:18
Speaker 1: finance analyst, I'm old enough to have been looking at
0:20
Speaker 1: the internet when it first came around.
0:22
Speaker 2: If thousands of people have to lose their jobs because
0:25
Speaker 2: of AI for it to become profitable, is that equation
0:30
Speaker 2: worth it? Tim Buckley, welcome to Stress Tested.
0:36
Speaker 1: Good morning, Ben. Great to be here.
0:38
Speaker 2: There's a lot to talk about, a lot that's happened
0:40
Speaker 2: even today and the last couple of weeks in the
0:42
Speaker 2: AI world and the backlash against data centers, some big
0:48
Speaker 2: moves from big companies and the government's just taken a
0:50
Speaker 2: big step as well. But before we get into that,
0:53
Speaker 2: would you just like to introduce yourself? You're an analyst
0:57
Speaker 2: and you've worked in the industry for over 30 years.
0:59
Speaker 2: Is that right?
1:00
Speaker 1: Yeah, showing my age, probably over 40 years or 40 years,
1:03
Speaker 1: should I say. But so I've had two careers, one
1:06
Speaker 1: 20 years in finance as a equities analyst for my sins.
1:11
Speaker 1: I was head of research at Citigroup at the time,
1:13
Speaker 1: the biggest bank in the world. I did that for
1:16
Speaker 1: about 10 years and I was an analyst for 10
1:18
Speaker 1: years before that. And then I moved into a niche
1:21
Speaker 1: area at the time. It was the global technology cleantech space.
1:26
Speaker 1: And then from there, I've spent the last 15 years
1:28
Speaker 1: running a not-for-profit public interest think tank, fully funded by philanthropy.
1:32
Speaker 1: So we have no government funding, no corporate funding, no
1:36
Speaker 1: vested interests, but it is about aligning the energy system
1:40
Speaker 1: of the future with the climate science.
1:43
Speaker 2: And how has that been for you? Has it been
1:45
Speaker 2: a bit of a challenge trying to get the Australian
1:48
Speaker 2: public and the government on board?
1:50
Speaker 1: It Is it an absolute challenge? Absolutely. We have a
1:55
Speaker 1: lot of vested interest pushing back on the climate science,
1:58
Speaker 1: undermining it, pushing a delay, disinformation, misinformation. I come up
2:03
Speaker 1: across that every day. That's partly why I was actually
2:08
Speaker 1: grabbed to work in this area, because having a finance background,
2:11
Speaker 1: I can use financial data. And so I started by
2:15
Speaker 1: investing in China, looking at China, talking to Chinese companies,
2:19
Speaker 1: and whether or not China is doing it for altruistic
2:22
Speaker 1: global climate science reasons or whether they're doing it for
2:25
Speaker 1: industry dominance or they just want to have massive investments
2:30
Speaker 1: in growth industries of the future. I believe it's actually
2:33
Speaker 1: all of those. So I actually spent a lot of
2:35
Speaker 1: my time looking at what China is doing. And so
2:38
Speaker 1: when I'm talking to Australian audiences in particular, it's more about, well,
2:42
Speaker 1: let's know what our number one trade partner is doing.
2:44
Speaker 1: Let's look at how fast they're moving. And we can
2:47
Speaker 1: debate the climate science if you really want. I don't
2:50
Speaker 1: debate it. At the end of the day, I talk
2:52
Speaker 1: to actuaries, the biggest brains in the world. They all
2:57
Speaker 1: work for the big global insurance companies. And for 40,
3:00
Speaker 1: 50 years, they've been telling us the climate science is real.
3:03
Speaker 1: The cost of insurance is going through the roof. Everyone
3:06
Speaker 1: in Australia now knows that, but they've known it for 30, 40,
3:09
Speaker 1: 50 years. So I actually started going to Swiss Re,
3:12
Speaker 1: Munich Re, Two of the biggest insurers in the world
3:14
Speaker 1: and I spoke to their actuaries and they go, we've
3:17
Speaker 1: got zero doubt this is real and the financial implications
3:21
Speaker 1: of it are huge. So let's actually prepare, mitigate and
3:27
Speaker 1: offset to where we can.
3:28
Speaker 2: So let's talk about data centers. There's been a lot happening.
3:33
Speaker 2: This morning there was a report in the AFR that
3:35
Speaker 2: I just read and said that the Albanese government is
3:39
Speaker 2: going to ban data centers from being built near homes
3:43
Speaker 2: and recreational facilities. And this is a response to community backlash.
3:49
Speaker 2: And there's been a lot of that in recent weeks
3:52
Speaker 2: and months. I think the first time I really noticed it,
3:56
Speaker 2: I was down in Melbourne and we had a new
3:59
Speaker 2: financial report of starting We've got a really great reporter
4:02
Speaker 2: down there called Rowan Smith, and he's not really covered
4:07
Speaker 2: data centers before, but he's very on the pulse in
4:12
Speaker 2: Melbourne about what's happening. And I'm a financial editor at news.com,
4:16
Speaker 2: so he came over to me and said, do you
4:18
Speaker 2: do stories about data centers? I said, yeah, we've done
4:21
Speaker 2: a few.
4:23
Speaker 1: Often they don't.
4:25
Speaker 2: Really resonate that well, just because I feel like a
4:27
Speaker 2: lot of people don't don't know what it's like to
4:30
Speaker 2: live near one at this stage. Um, but then he said, oh,
4:34
Speaker 2: what about this? And he showed me some pictures of
4:36
Speaker 2: these giant concrete pylons that were in West Footscray in Melbourne.
4:42
Speaker 2: And he said, all the locals are calling it Mordor. Um,
4:47
Speaker 2: they're sick of it. They said, there's this noise that's
4:49
Speaker 2: coming out of it. And, um, you know, 24 hours
4:53
Speaker 2: a day, low humming sort of vibration type noise. And
4:57
Speaker 2: there was this huge backlash against it. And since then,
4:59
Speaker 2: I've just noticed that this backlash to data centers has
5:04
Speaker 2: really sort of come to the fore. It's all over
5:07
Speaker 2: my social media feed. I think a lot of young
5:09
Speaker 2: people are really very skeptical of AI from what I've seen.
5:14
Speaker 2: And a lot of these communities that live in these
5:17
Speaker 2: places where data centers are being built feel like they
5:22
Speaker 2: don't have agency over what's happening online. Um, and they're
5:26
Speaker 2: seeing some of the problems that are arising because of that. Um,
5:30
Speaker 2: and it came to a head over the last few weeks,
5:32
Speaker 2: next DC that built that more door in the commas, um,
5:38
Speaker 2: the data center was still being built in West foot's grade,
5:41
Speaker 2: the M three data center. Um, they released a statement
5:46
Speaker 2: to the ASX saying that their profit, um, expectations have
5:50
Speaker 2: been downgraded because of this big community backlash. I think
5:54
Speaker 2: their share price crashed 40% in one day. And we
5:58
Speaker 2: also saw Firmus, which is a NeoCloud data center provider.
6:04
Speaker 2: They were looking to list on the stock exchange and
6:08
Speaker 2: that flopped because of concerns over the firm's valuation. And
6:14
Speaker 2: all this happened in the space of a few weeks.
6:16
Speaker 2: And then we've got the prime minister reportedly coming out
6:19
Speaker 2: today saying that He's going to look at banning data
6:24
Speaker 2: centers being built near homes and community centers. To me,
6:28
Speaker 2: it feels like quite a big turning point against AI
6:33
Speaker 2: and data centers in Australia. Do you see it that way?
6:36
Speaker 1: I do. I think you've summarized it really well. No
6:40
Speaker 1: one had even heard of data centers two years ago,
6:43
Speaker 1: and now literally you can't open the financial review without
6:47
Speaker 1: finding five or ten articles every day. And part of
6:50
Speaker 1: that is the amount of capital that the global majors,
6:54
Speaker 1: the American IT majors are trying to deploy in this
6:58
Speaker 1: sector and the speed of change. The speed of change
7:02
Speaker 1: is unbelievable. And I say that as a finance analyst,
7:05
Speaker 1: I'm old enough to have been looking at the internet
7:07
Speaker 1: when it first came around and hit the financial markets.
7:10
Speaker 1: And we had the massive boom, massive hype, massive, it's
7:14
Speaker 1: going to change the world. And then the bubble collapsed.
7:18
Speaker 1: And 10 years later, Everything we were talking about came about.
7:22
Speaker 1: But in the meantime, you had financial carnage. And that's
7:25
Speaker 1: what we're starting to see today. But I liked how
7:28
Speaker 1: you actually married the issue of what the prime minister
7:31
Speaker 1: is saying today and this week, what the energy minister
7:33
Speaker 1: is saying yesterday with the train wreck that we've seen
7:37
Speaker 1: down in West Footscray. We've seen it over in WA.
7:40
Speaker 1: We've seen it in Lane Cove in Sydney, where local
7:44
Speaker 1: communities are getting up in arms and saying, no, we're
7:47
Speaker 1: going to protect our local community. And if you haven't
7:50
Speaker 1: done the right community engagement beforehand, you've got a train wreck.
7:53
Speaker 1: And I think the data center industry is a very, very, well,
7:58
Speaker 1: they were very aware of it six months ago. I
8:00
Speaker 1: was at a conference. I was on a panel with
8:03
Speaker 1: three data center developers and all of them talked about
8:07
Speaker 1: social license. I'm a finance guy. Finance people don't really
8:11
Speaker 1: worry about social license unless it's going to stop your
8:13
Speaker 1: project proposal. And then it's critical. And what they were
8:17
Speaker 1: saying was, The data centre industry is so close to
8:21
Speaker 1: following the offshore wind, the onshore wind and the grid
8:24
Speaker 1: transmission sector into a train wreck. We've got to build
8:28
Speaker 1: social licence. Otherwise, we just go the same way as
8:31
Speaker 1: the offshore wind industry in Australia has done, which is
8:35
Speaker 1: dead as a dodo. And the biggest data centre developers
8:38
Speaker 1: in Australia were saying that on a panel with me.
8:40
Speaker 1: I was there meant to be holding them to account.
8:42
Speaker 1: All I had to do was nod because they were
8:44
Speaker 1: actually saying, let's avoid the train wreck. And their real worry,
8:48
Speaker 1: and so I suppose what we were then debating was,
8:51
Speaker 1: is there a role for the government to step in
8:53
Speaker 1: and actually legislate it? And their answer was yes, because
8:57
Speaker 1: it's going to be the bad operators who will destroy
8:59
Speaker 1: it for everyone, just like the rogue operators in solar
9:02
Speaker 1: have done a lot of damage to regional social licence.
9:08
Speaker 1: So social licence becomes a yes or no decision. And
9:12
Speaker 1: if you're a developer of a concept, you want to deploy,
9:15
Speaker 1: I don't know, $ 32 billion. and the social licence isn't there,
9:19
Speaker 1: you've got nothing.
9:21
Speaker 2: I don't want to put you on the spot, but
9:22
Speaker 2: just that announcement from Anthony Albanese today, what's your first
9:28
Speaker 2: thoughts about that, banning data centres from being near homes?
9:36
Speaker 1: I think it's inevitable. The job of the government is
9:39
Speaker 1: to protect voters and the country and to keep vested
9:43
Speaker 1: interest in alignment. But Why am I so categoric on that?
9:48
Speaker 1: Victoria's actually just introduced legislation a couple of months ago
9:51
Speaker 1: saying you can't build a data centre within two kilometres
9:54
Speaker 1: of a school. So the industry knew this was coming. Now, Victoria,
9:58
Speaker 1: obviously more social progressive, well, they are at the moment
10:01
Speaker 1: until the next election. So that Victorian lesson set a benchmark.
10:09
Speaker 1: And what I understand the federal government's trying to do
10:12
Speaker 1: now is say, let's actually have a national set of rules.
10:17
Speaker 1: Let's legislate them so that they're not please, please, sir,
10:20
Speaker 1: will you comply? It will, no, these are the rules.
10:23
Speaker 1: These are the rules of engagement. You want to get
10:25
Speaker 1: fast approval, do this. You want a slow, but positive approval,
10:30
Speaker 1: go your own way. And if you want a fast no,
10:33
Speaker 1: then these are the conditions aware of fast no. Now
10:36
Speaker 1: fast no is far better than a slow, never yes.
10:41
Speaker 1: You can waste a lot of money investing in a
10:43
Speaker 1: project that's never going to get approved. And so what
10:47
Speaker 1: I think the federal government's trying to do, and I
10:49
Speaker 1: applaud them for it. We've got a situation where the
10:53
Speaker 1: Premier of New South Wales loves data centres. It involves
10:56
Speaker 1: a huge amount of investment in New South Wales. We're
10:59
Speaker 1: from New South Wales. We want investment. We want a
11:01
Speaker 1: healthy economy here. But then Victoria goes to the proponent,
11:05
Speaker 1: come down to us and we'll waiver a few of
11:07
Speaker 1: those rules. And then Queensland goes, I'll come to Queensland.
11:10
Speaker 1: We'll waiver a lot of the rules. And then Western
11:13
Speaker 1: Australia go, we love data centres. We haven't got any
11:15
Speaker 1: We'll waiver all the rules. And so you end up
11:18
Speaker 1: with a race to the bottom. At the end of
11:21
Speaker 1: the day, I think we need the data centers. A
11:24
Speaker 1: lot of them, we only have to look at the
11:26
Speaker 1: revenue growth of these companies. It's astronomical. You only have
11:31
Speaker 1: to look at the compute power of the AI changes
11:33
Speaker 1: that are coming. We're going to need data centers. We
11:36
Speaker 1: just need them to be built. And the only way
11:39
Speaker 1: you get them built is if you have a social
11:41
Speaker 1: license to operate. And so the federal government's saying, rather
11:44
Speaker 1: than a race to the bottom, let's set some rules.
11:46
Speaker 1: Let's consult with the industry, set some rules, consult with
11:51
Speaker 1: consumers as well. So it's balanced and then set some
11:55
Speaker 1: rules so that they don't waste time developing project proposals
11:58
Speaker 1: that are never going to get approved. Or even, sorry,
12:01
Speaker 1: even once they're approved, the community can then overrule them
12:04
Speaker 1: by just literally boycotting them as Mordor found.
12:09
Speaker 2: And Just on that social license and how people feel
12:13
Speaker 2: about data centers, what's the sense that you're getting from
12:17
Speaker 2: the public about data centers? I said before that I
12:20
Speaker 2: felt the tide was turning a bit. Do you think
12:23
Speaker 2: people are really concerned about what's happening?
12:26
Speaker 1: I think people are very confused. We are talking a
12:29
Speaker 1: seismic shift. We're talking about the biggest investment boom in
12:34
Speaker 1: world history and what America is doing. America led the charge,
12:38
Speaker 1: like A year ago, 80% of all the data centers
12:42
Speaker 1: in the world were in America. And then America realized
12:45
Speaker 1: they ran out of social license really quickly when electricity
12:48
Speaker 1: prices went up 12% in one year. And the regulators
12:54
Speaker 1: turned around and said, well, that's because the data centers
12:56
Speaker 1: weren't required to bring your own energy, BEYONCE. A really
13:00
Speaker 1: silly acronym. No one's claiming credit for it, but bring
13:03
Speaker 1: your own clean new energy and you might get a
13:06
Speaker 1: social license. You might be allowed to proceed. America and
13:09
Speaker 1: even Trump acknowledge that, uh, if you don't bring your
13:12
Speaker 1: own new energy, you're going to cause a backlash from
13:15
Speaker 1: the local residents in the region because you're going to
13:19
Speaker 1: push up the cost of energy for everyone else. And
13:22
Speaker 1: so fortunately, Australia is a couple of years behind America, very,
13:26
Speaker 1: very favorable investment climate for, for American corporates. Um, but
13:31
Speaker 1: we're trying to avoid the train wreck of, um, another
13:37
Speaker 1: next DC and another and another, we've actually need some
13:40
Speaker 1: road rules. So what's the mood of the community? I
13:43
Speaker 1: would say more fear and unknown, um, and a fear
13:47
Speaker 1: that their rights are going to be overruled by very,
13:51
Speaker 1: very wealthy, um, self-interest center.
13:57
Speaker 2: Is there also a flip side to that? I mean,
13:59
Speaker 2: you mentioned that we need data centers if we're going
14:02
Speaker 2: to sort of keep up, uh, with the global AI boom. Um,
14:07
Speaker 2: Is there a flip side that these data centers, they're
14:10
Speaker 2: going to provide a huge economic benefit to the communities
14:14
Speaker 2: that they're in potentially? Is that right? Or do they
14:17
Speaker 2: not really?
14:18
Speaker 1: That's why we talk about, well, I'm talking about social
14:22
Speaker 1: license in a broader context, not just, I don't want
14:24
Speaker 1: a data center opposite my house. Of course, I'm going
14:27
Speaker 1: to fight that. But what about the people three kilometers away?
14:31
Speaker 1: They're the ones now up in arms as well. So
14:34
Speaker 1: it's about the wider social license at the end of
14:36
Speaker 1: the day. Not my backyard is a standard saying that
14:40
Speaker 1: we've had for, I don't know, 250 years of economic development.
14:44
Speaker 1: No one wants a massive industry built right next door
14:46
Speaker 1: to them. But there is a greater good requirement. We're
14:49
Speaker 1: all using our mobile phones. We all want increased productivity.
14:53
Speaker 1: And AI is a massive productivity enhancer.
14:57
Speaker 2: And people would have said the same things about power
14:59
Speaker 2: plants and things when they were built back in the day.
15:02
Speaker 2: Nobody would want a chemical plant or a, you know,
15:06
Speaker 2: a huge factory sort of outside their home.
15:10
Speaker 1: That's true. But what we maybe need to go back,
15:13
Speaker 1: maybe 50 years ago, social licence was far less of
15:16
Speaker 1: an issue, but coal mines are out in the regions.
15:21
Speaker 1: And compulsory acquisition legislation was brought in by the New
15:24
Speaker 1: South Wales government, by the Queensland government, to actually acquire
15:28
Speaker 1: the properties most affected. And so when you're complaining about
15:33
Speaker 1: a coal mine literally next door to you, Invariably, the
15:36
Speaker 1: coal mine will just make you an offer. They'll get
15:39
Speaker 1: a non-disclosure agreement as well. They'll pay you double what
15:42
Speaker 1: your property is worth because the coal underground is worth
15:44
Speaker 1: 10 times, 50 times, 100 times that. So they ended
15:48
Speaker 1: up silencing the community, the local community. The people who
15:53
Speaker 1: are obviously 10, 20 years later, the coal mine gets
15:56
Speaker 1: bigger and bigger. It just uses the coal here and
15:58
Speaker 1: then creeps to the right. and then comes up against
16:01
Speaker 1: someone and that person then literally wakes up and finds
16:03
Speaker 1: they're looking over their fence at a coal mine and
16:06
Speaker 1: then they've got a train wreck. Now, a lot of
16:08
Speaker 1: them have known that was coming, but we're talking about
16:11
Speaker 1: a handful of people and most of the people are
16:13
Speaker 1: paid out. Compulsory acquisition solves the problem for most of them.
16:18
Speaker 1: It might destroy the local community, or it does in
16:21
Speaker 1: many of those cases, but you're building a freeway. You're
16:23
Speaker 1: not going to let one person say, could you just
16:25
Speaker 1: do a little U bend around my house? The federal
16:30
Speaker 1: government's got compulsory acquisition requirements. You've got to look at
16:32
Speaker 1: the greater good. At the end of the day, we're
16:37
Speaker 1: not China. They literally, when they built the biggest dam
16:42
Speaker 1: in the world, they literally moved a million people. Reports
16:46
Speaker 1: are they moved five million people. They didn't get any choice.
16:49
Speaker 1: That was compulsory acquisition without compensation. Pick them up and
16:52
Speaker 1: move them and build the biggest dam in the world.
16:54
Speaker 1: But fortunately, we are a democracy, but our government isn't. Still,
16:59
Speaker 1: we need a healthy economy. I don't want to go
17:03
Speaker 1: back to the Stone Age. I want jobs for my kids,
17:05
Speaker 1: and I want a strong, healthy, sustainable economy. So I
17:10
Speaker 1: want the data centers, and I want to use my phone.
17:13
Speaker 1: I want to have my productivity enhanced. I want to
17:16
Speaker 1: be able to do data searches like I study China.
17:18
Speaker 1: I don't read Chinese, but AI can, and it can
17:21
Speaker 1: summarize it in minutes, reports that I can't even read,
17:25
Speaker 1: and it summarizes them in English. I need to as
17:29
Speaker 1: an analyst, then fact check it, but I can read
17:31
Speaker 1: numbers in Chinese. I can't read the language. So the
17:35
Speaker 1: AI there, I've had to employ Chinese analysts, Chinese Australian
17:39
Speaker 1: analysts to read the reports and put them into English
17:41
Speaker 1: for me. So just one small example, but that means
17:45
Speaker 1: I can have my productivity go up. So I'm in
17:49
Speaker 1: favor of economic development. I just want it to be
17:52
Speaker 1: sustainable and we've got to look at the greater good.
17:55
Speaker 1: So we've got to work out, we need the data centers.
17:57
Speaker 1: Let's make sure that they tick as many boxes as
18:00
Speaker 1: possible and ideally net benefits. So you said net benefit
18:05
Speaker 1: to the local community. That's going to be hard. But
18:08
Speaker 1: at least make sure that there's enough benefit or enough
18:14
Speaker 1: compensation so that they can get on with their lives
18:17
Speaker 1: and not feel victimized. Because if they're victimized, they will fight.
18:21
Speaker 1: And even after you've got the approval, they could still
18:24
Speaker 1: win as Footscray showed.
18:27
Speaker 2: I mean, Aussies are very attached to their homes, aren't they?
18:29
Speaker 2: So any idea that something would come in and sort
18:31
Speaker 2: of disrupt their local environment, you can understand why they
18:36
Speaker 2: might be upset about that. Is there a solution that
18:39
Speaker 2: we could just put all these data centres in the desert?
18:41
Speaker 2: There must be a reason they're building it in communities.
18:43
Speaker 2: Why are data centres being built in cities now?
18:46
Speaker 1: It's proximity to the consumer. If you're 500 kilometres away
18:51
Speaker 1: from the consumer, you might find your phone takes two seconds,
18:54
Speaker 1: not one second, to answer your prompt. or a minute,
18:58
Speaker 1: not 10 seconds. Now, one versus two seconds, you can't
19:02
Speaker 1: even scratch in that time, but in a minute or
19:04
Speaker 1: five minutes or for serious compute, that is a problem.
19:08
Speaker 1: Once I found out it's a problem, proximity to the
19:10
Speaker 1: consumer is going to be a problem because the land
19:12
Speaker 1: cost is really high, let alone the ability, even once
19:15
Speaker 1: you bought the land, to actually then build on it
19:18
Speaker 1: and getting the council, the local council, the state government,
19:20
Speaker 1: the federal government, all three of them to approve it
19:23
Speaker 1: really slow. In Australia, everything's slow. So all sorts of issues.
19:27
Speaker 1: The closer to the consumer, the harder it is to
19:30
Speaker 1: build and the more expensive it is to build. But
19:33
Speaker 1: what they were saying was all the infrastructure is there.
19:36
Speaker 1: And so I met with New South Wales or Sydney
19:38
Speaker 1: Water and Sydney Water said, we've got a water problem.
19:41
Speaker 1: We don't have enough water. And even if we have
19:44
Speaker 1: enough water, we don't have enough water reticulation. We don't
19:47
Speaker 1: have enough pipes to get to North Ryde. I'm on
19:51
Speaker 1: the North Shore. North Ryde is a favourite data centre location.
19:54
Speaker 1: They go, if all the data centres that want to
19:56
Speaker 1: be built in North Ryde, there's not enough water pipes
19:59
Speaker 1: to get the water to actually cool the data centres.
20:03
Speaker 1: And so I was saying, well, we can just build
20:06
Speaker 1: another desal plant. We built one 20 years ago and
20:08
Speaker 1: it was a waste of time. because we didn't have
20:10
Speaker 1: a drought, you can use renewable energy to power desalination.
20:16
Speaker 1: We can get more. That's a finance analyst perspective. We
20:18
Speaker 1: need more water. I can build you water. And Sydney
20:21
Speaker 1: Water's response was, you can give me water, but if
20:23
Speaker 1: I can't get it to North Ryde, your water's a
20:26
Speaker 1: waste of time. And so it's the pipes, it's the infrastructure.
20:30
Speaker 1: So building in the middle of the city is all
20:32
Speaker 1: about accessing electricity and water and consumers. But now with
20:39
Speaker 1: the backlash we're seeing, the data center operators are realizing, well,
20:43
Speaker 1: maybe two-thirds of them can be in regional Australia. Or
20:47
Speaker 1: as some of them are threatening, maybe we could do
20:49
Speaker 1: it in India or Malaysia where social license is less
20:52
Speaker 1: of a problem and those governments are more focused on
20:56
Speaker 1: economic growth. Can they get around the whole social license? Now,
21:01
Speaker 1: to some degree, that's a threat. I think it's a
21:03
Speaker 1: bit of a hollow one, but the industry tells me
21:06
Speaker 1: it's real. that they will literally just go and build
21:08
Speaker 1: them in Singapore or in Malaysia or in India. Now,
21:12
Speaker 1: India is a different point. And that's why I was
21:14
Speaker 1: just in Western Australia. Western Australia is going to have
21:16
Speaker 1: data centers. At the moment, it doesn't. They're all Sydney
21:19
Speaker 1: and Melbourne, almost all. South Australia then all of a
21:22
Speaker 1: sudden becomes relevant because what you need is compute power
21:27
Speaker 1: when the consumer needs it. Now, if you're trying to
21:30
Speaker 1: power that with the sun, why don't we follow the sun?
21:33
Speaker 1: The Sun is really good in Sydney, then it's good
21:36
Speaker 1: in South Australia, then it's good in Western Australia three
21:38
Speaker 1: hours later, and then it's good in India three hours
21:41
Speaker 1: after that. So in fact, if you own five data centers,
21:44
Speaker 1: you can actually stagger it. The consumer doesn't even know
21:47
Speaker 1: that the compute's being done in South Australia or Western Australia.
21:51
Speaker 1: The government will know if it's done in India. And
21:53
Speaker 1: so then you've got to bring the federal government along
21:55
Speaker 1: and say, well, hang on, national security says we don't
21:58
Speaker 1: want consumer data going offshore, whether it's to India, a
22:02
Speaker 1: trusted ally, or whether it's going to China, that's not
22:05
Speaker 1: going to be allowable, energy security. But even going into Malaysia,
22:10
Speaker 1: who's to say that the Malaysian data centres are ring-fenced
22:13
Speaker 1: enough to avoid North Korean hacking? And so we can...
22:17
Speaker 1: Data security is really, really topical.
22:19
Speaker 2: How big is the opportunity that Australia has in this space?
22:22
Speaker 2: Do you think this has the potential to sort of
22:25
Speaker 2: revitalise Australia?
22:28
Speaker 1: We have been... We, the financial review, the financial media,
22:33
Speaker 1: the financial economists have been really worried about a lack
22:36
Speaker 1: of economic growth in Australia. And now all of a
22:39
Speaker 1: sudden we're talking about the biggest investment boom in Australian history.
22:44
Speaker 1: And it's not just a boom the size of the Pilbara,
22:47
Speaker 1: our number one export source, iron ore, but we took
22:50
Speaker 1: 40 years or 30 years or 20 years to build that.
22:53
Speaker 1: The Northwest Shelf took 20, 30, 40 years to build
22:56
Speaker 1: for LNG. We're talking about doing that all in the
22:59
Speaker 1: next decade. So it's being truncated and that's the problem.
23:03
Speaker 1: And that's the opportunity. We're talking a hundred, $ 150 billion
23:07
Speaker 1: of investment in Australia in the coming five to 10 years.
23:12
Speaker 1: I would question, do we have enough workers? Do we
23:15
Speaker 1: have enough electricians? Um, we need every electrician to have
23:19
Speaker 1: two or three apprentices, uh, because we literally have a
23:22
Speaker 1: building boom and for every data center, you're going to
23:25
Speaker 1: need a wind farm, a solar farm, a battery energy
23:28
Speaker 1: storage system, a grid connection. You're then going to need
23:31
Speaker 1: that maintained for the next 20, 30, 40 years. You're
23:34
Speaker 1: going to need a lot of workers. And where I
23:37
Speaker 1: think the government's getting really nervous is we've got a
23:40
Speaker 1: renewable energy build-out, we've got a data centre build-out, and
23:45
Speaker 1: we've got a desperate need, and we've had a desperate
23:47
Speaker 1: need for 10 or 20 years to build a whole
23:49
Speaker 1: lot of homes for our younger population. We've got a
23:52
Speaker 1: housing crisis. We need workers for homes. So if they
23:56
Speaker 1: all run off, all the electricians run off and build
23:58
Speaker 1: data centres... Who's going to actually do the lights in
24:01
Speaker 1: the houses and we'll have a slowdown in housing construction
24:04
Speaker 1: or worse, housing costs, additional housing costs will just keep
24:08
Speaker 1: going up. So we've got to balance it, but let's
24:11
Speaker 1: look at it as the positive. You said, let's put
24:13
Speaker 1: the license rules on. Let's try and beef up the
24:17
Speaker 1: TAFE system. Fortunately, the Albanese government's been doing that for
24:22
Speaker 1: the last four years and we need to get a
24:25
Speaker 1: lot more apprentices, certified apprentices in electrical trades industries. Um,
24:30
Speaker 1: and that'll hopefully give us the workforce we need. We
24:34
Speaker 1: need to be wary about these anti-immigration backlash because historically
24:38
Speaker 1: Australia has always been able to get the workers we
24:40
Speaker 1: need because we just import them or everyone else has
24:43
Speaker 1: a data center boom going on. Um, so turning off
24:47
Speaker 1: the supply of new hardworking immigrants to me is really dumb.
24:51
Speaker 1: We need them. We need those workers where they're happy
24:54
Speaker 1: to work. They have brilliant work ethics. And they bring
24:57
Speaker 1: a whole lot of skills. And let's hope they go
24:59
Speaker 1: to the regions, do the construction jobs, get the skills required.
25:02
Speaker 1: So we need to move the TAFEs out to the regions.
25:06
Speaker 1: But all of that means we can actually have a
25:09
Speaker 1: thriving economy that's also sustainable.
25:13
Speaker 2: Yeah, it's an interesting idea, isn't it, that you could
25:15
Speaker 2: be paid to live near a data center. You could
25:18
Speaker 2: reap some of the economic benefits of it. you know,
25:20
Speaker 2: potentially off your power bill or something like that.
25:22
Speaker 1: Absolutely. I should give a shout out the one up
25:25
Speaker 1: at Curry, um, the Curry data center, two hours north
25:28
Speaker 1: of Sydney, just north of Newcastle. They've offered everyone in
25:32
Speaker 1: the suburb, not the Shire, everyone within that Curry suburb,
25:35
Speaker 1: 200 bucks a year for the life of the data center.
25:39
Speaker 1: And they made that really public so that anyone who's
25:41
Speaker 1: protesting against it is then having to come up against
25:45
Speaker 1: their local neighbor and say, well, hang on, you're trying
25:47
Speaker 1: to take 200 bucks out of my wallet. And not
25:49
Speaker 1: just my wallet, but every other house in the street,
25:52
Speaker 1: every other house in the community, that's a lot of money.
25:55
Speaker 1: And so all of a sudden, the community benefit is real.
25:58
Speaker 1: I do a lot of travel in regional Australia. They say, look,
26:03
Speaker 1: you guys from the Big Smoke, I'm from Sydney. You
26:05
Speaker 1: guys from the Big Smoke, you get all the benefit.
26:07
Speaker 1: We get all the costs. How about we get a
26:10
Speaker 1: share of the benefits that outweigh the cost to us?
26:12
Speaker 1: Give us the local jobs. Make sure our roads are enhanced,
26:15
Speaker 1: not degraded. make sure our council actually gets some revenue,
26:18
Speaker 1: ongoing revenue to pay. So the rates don't go up. Um,
26:22
Speaker 1: because if the data centers using two fifths of bugger
26:25
Speaker 1: or land, it's not going to pay a lot of rates.
26:28
Speaker 1: So like a wind turbine, let's make sure the council
26:30
Speaker 1: gets some fee, some extra fees. Um, and then 200
26:35
Speaker 1: bucks a year per project. All of a sudden you're
26:38
Speaker 1: going to have communities going, bring the data centers over
26:41
Speaker 1: the blue mountains to, to Oberon Shire. And we'd love
26:44
Speaker 1: to have some DCs. I'd love to, um, We're going
26:47
Speaker 1: to lower my power bills. I've got a property out
26:49
Speaker 1: at Oberon. But let's do it for the whole community,
26:53
Speaker 1: not just the vested interests.
26:55
Speaker 2: And is there a danger here? We saw this announcement
26:58
Speaker 2: today and you mentioned that Victoria have put some rules
27:01
Speaker 2: in place. Is there a danger that we could hit
27:03
Speaker 2: the brakes too hard and we could scare these big
27:07
Speaker 2: companies from investing in Australia?
27:08
Speaker 1: Yeah. There is, and that is the threat, that capital
27:12
Speaker 1: is totally borderless. It will go where the best risk-adjusted
27:16
Speaker 1: returns are. But I'll bring back the point you made
27:19
Speaker 1: really strongly, and I totally agree with you. American corporates
27:23
Speaker 1: see Australia as a geopolitical ally of America, as a
27:26
Speaker 1: safe place to invest. Korea and Japan, Australia is a
27:30
Speaker 1: trusted ally of those countries. So we understand do for
27:36
Speaker 1: all of the local noise of one nation versus libs
27:39
Speaker 1: versus greens versus labor versus teals we've got all that
27:43
Speaker 1: noise but relative to other countries we are pretty blessed
27:47
Speaker 1: um and foreign investors see that and so we do
27:50
Speaker 1: need to actually recognize that there's a bit of bluff
27:53
Speaker 1: in there of course the data centers want to don't
27:55
Speaker 1: want to have to pay social license fees for the
27:58
Speaker 1: next 30 years because that's money you're taking straight out
28:00
Speaker 1: of their um gold-plated pockets um But what I remind
28:05
Speaker 1: them is having 100% of nothing, you're better off getting 90%
28:10
Speaker 1: of something big. And when we're talking big, we're talking
28:12
Speaker 1: $ 32 billion a pop. These are pretty bloody big projects.
28:17
Speaker 1: Getting 90% of that is worth getting it. And so
28:20
Speaker 1: what Minister Bowen and Prime Minister Albanese are saying is
28:24
Speaker 1: if you tick all the boxes, we'll actually not just
28:27
Speaker 1: say you're going to get a tick or likely get
28:29
Speaker 1: approval once we've done due diligence, we'll fast track you.
28:33
Speaker 1: Now that is worth its weight in gold to the
28:35
Speaker 1: data center developer because he then gets to connect and
28:38
Speaker 1: they need power. They need compute today and next year,
28:42
Speaker 1: and they don't want to spend two years investing to
28:44
Speaker 1: find out they haven't got anything. And Australia has got
28:47
Speaker 1: a very bureaucratic system. I accept that. If we can
28:50
Speaker 1: fast track it, then that makes it worthwhile doing the
28:53
Speaker 1: right thing early. And one of the things most important
28:57
Speaker 1: to me is making sure that data centers actually help
29:01
Speaker 1: solve the climate science, not make it worse. And so
29:05
Speaker 1: to me, a data center operator is the best possible
29:10
Speaker 1: purchaser of energy in Australia because they're backed by global
29:13
Speaker 1: financial giants who are eminently bankable. They're going to operate
29:17
Speaker 1: an infrastructure facility for 20 or 30 years. They can
29:20
Speaker 1: sign a power purchase agreement tomorrow. And if you say
29:23
Speaker 1: it's for a new wind farm, a new solar farm,
29:26
Speaker 1: a new battery, that can unlock a $ 30 billion data
29:30
Speaker 1: center could unlock $ 30 billion of new firmed generation capacity.
29:35
Speaker 1: And as I mentioned, that one in Western Downs, it's
29:38
Speaker 1: right next to the biggest grid connection. So all of
29:40
Speaker 1: that can access the grid, no problem. That will then
29:43
Speaker 1: defray the cost of the grid for everyone in Queensland,
29:46
Speaker 1: which will then lower the power price, not just for
29:48
Speaker 1: the locals, but the whole of Queensland. And so everyone
29:52
Speaker 1: in Queensland gets a financial benefit because we created a
29:56
Speaker 1: win-win situation. So For every dollar a data center, you
29:59
Speaker 1: could get a dollar of new firm generation. And so
30:03
Speaker 1: and all of that could be or 95 percent of
30:05
Speaker 1: it could be zero emissions. So that actually allows Minister
30:08
Speaker 1: Bowen to get to his 82 percent renewables target even
30:12
Speaker 1: as energy demand goes through the roof because it's electricity
30:15
Speaker 1: demand and electricity is easy to decarbonize if done correctly.
30:20
Speaker 1: And so Australia actually delivers on its social license, on
30:24
Speaker 1: its global obligations, And we get sustainable economic growth. And
30:28
Speaker 1: I keep coming back to that. I'm all for economic growth.
30:31
Speaker 1: I'm a finance analyst. I love money. I love it.
30:33
Speaker 1: It powers the world, whether we like it or not.
30:36
Speaker 1: Finance powers the world. But if we can do it sustainably,
30:40
Speaker 1: that's even better. And if we can do it fast
30:43
Speaker 1: and sustainably, that's even good for the data center developers.
30:46
Speaker 2: What do you see Australia's position being like in comparison
30:50
Speaker 2: to other countries? Like, are we ahead of the game
30:53
Speaker 2: or are we sort of playing catch up?
30:56
Speaker 1: I think social license has been weaponized in Australia. I
31:00
Speaker 1: don't think Texas really gives a toss about local noise
31:05
Speaker 1: and flicker. And if you don't like it, move. It's
31:08
Speaker 1: the free market. It's Texas. But it's worth bearing in mind,
31:11
Speaker 1: Texas is the biggest builder, developer, operator of wind projects
31:17
Speaker 1: in the whole of America. It's the biggest operator of
31:20
Speaker 1: solar projects in the whole of America. It's the biggest
31:24
Speaker 1: operator of batteries in In America, it's got the biggest
31:26
Speaker 1: grid transmission system of any state in America, Texas, but
31:32
Speaker 1: they love money. They love development. And so it's about
31:37
Speaker 1: making sure that the. The consumer backlash you mentioned is
31:41
Speaker 1: very real in Texas because what the locals are saying,
31:44
Speaker 1: the Texans are saying is that data center is, I
31:47
Speaker 1: can see the impact of the data center on my
31:49
Speaker 1: electricity bill immediately. And my electricity bill has gone up 12%
31:54
Speaker 1: this year. It went up 12% last year. That's all
31:57
Speaker 1: slated to the data centre. Why does it go up?
31:59
Speaker 2: Is it because the data centres are using so much
32:02
Speaker 2: electricity that it puts pressure on the grid?
32:05
Speaker 1: Absolutely. So data centres are really power hungry. And so
32:10
Speaker 1: we've got something like 65 gigawatts of new data centre
32:13
Speaker 1: developments across gigawatts. That's huge. Like the Australian, the national
32:17
Speaker 1: electricity market, total capacity today is about 77 gigawatts. So
32:22
Speaker 1: we've got as many data center proposals on the table
32:24
Speaker 1: in the next five to 10 years, almost as the
32:27
Speaker 1: entire energy electricity system installed and operating today. So if
32:31
Speaker 1: you put all that extra load on data centers are
32:34
Speaker 1: also relatively price agnostic. In other words, they just need data.
32:39
Speaker 1: They need power to operate and to operate, to provide
32:43
Speaker 1: the data, to provide the compute. And so they're willing
32:46
Speaker 1: to pay high prices, but, um, Yeah, ultimately, they're just
32:50
Speaker 1: pushing the price onto everyone else. And they're taking power
32:54
Speaker 1: that was previously going to houses and industry. They're willing
32:56
Speaker 1: to pay a higher price. So, okay, put the price up.
33:00
Speaker 1: Consumption for everyone else goes down, but they all pay
33:02
Speaker 1: the price. And so what Minister Bowen's been really clear,
33:05
Speaker 1: bring your own new energy. He says new clean energy.
33:10
Speaker 1: Minister Ayres says new energy. He drops the clean. I'm
33:14
Speaker 1: pushing back on Minister Ayres. I want it to be clean,
33:16
Speaker 1: new energy, because that is sustainable. But yeah, is there
33:20
Speaker 1: room for a gas peaker in there for 5%? No
33:22
Speaker 1: problem for me. But wind, solar, they're the lowest cost
33:26
Speaker 1: source of new generation. But then you've got a time issue.
33:30
Speaker 1: We know it takes you three to five years to
33:32
Speaker 1: build a wind farm in Australia, even once it's approved.
33:36
Speaker 1: It might take you only 18 months to build a
33:38
Speaker 1: solar project, 12 months to build a battery project, 18
33:41
Speaker 1: months to build a data centre. So I can get
33:43
Speaker 1: my battery, my solar and my data centre all built
33:45
Speaker 1: in the same time. But if I've then got to
33:47
Speaker 1: wait two years for the wind Is my approval going
33:50
Speaker 1: to sit there on hold for two years? What I
33:52
Speaker 1: would argue the government will do is say, no, you've
33:55
Speaker 1: got a short-term target, a medium-term target, a long-term target.
33:58
Speaker 1: Bring 70% of your electricity as new within two years.
34:03
Speaker 1: Bring the other 20%, get up to 90% within four years.
34:07
Speaker 1: The last 10% do on a five, six, seven year view.
34:10
Speaker 1: You know, let's just be realistic. This is a 20,
34:13
Speaker 1: 30 year investment proposal. You can't get everything done. Wind
34:17
Speaker 1: takes a long time to build. So let's actually just
34:20
Speaker 1: make sure that the legislation isn't impossible to fulfill. But
34:26
Speaker 1: the minute you do that, you're leveraging the existing grid.
34:29
Speaker 1: If we're pumping more electricity through the existing grid, that
34:33
Speaker 1: lowers the per unit cost for everyone. So whether it's
34:37
Speaker 1: New South Wales, a data center in Queensland lowers the
34:39
Speaker 1: cost for everyone, then that actually builds social license financially
34:44
Speaker 1: to me. I'm a finance guy. But the silent majority
34:48
Speaker 1: are going to go, my power bill's gone down. Now,
34:50
Speaker 1: by the way, New South Wales residents on the 1st
34:53
Speaker 1: of July, 2026, got a 10% price cut to their
34:57
Speaker 1: electricity bill. We don't read about that very often, but
35:00
Speaker 1: we are actually seeing record high renewables in the New
35:02
Speaker 1: South Wales grid equate to lower power prices. I think
35:06
Speaker 1: we'll see the same thing next year. And so all
35:09
Speaker 1: of a sudden that social issue, we've had a lot
35:12
Speaker 1: of pushback. It takes a long time to build a
35:14
Speaker 1: wind farm, particularly in New South Wales. So it's taken time.
35:18
Speaker 1: But as you see the benefits flow through, the consumer
35:22
Speaker 1: buy-in to the energy system transformation that we have to
35:25
Speaker 1: have goes up. I think we can head that off
35:29
Speaker 1: at the pass for data centers. If they're air-cooled, if
35:34
Speaker 1: they're renewable energy powered, if they're close to the grid connectivity,
35:38
Speaker 1: so they're enhancing grid, if they have demand response flexibility,
35:42
Speaker 1: in other words, they turn down when we've got power shortages, right?
35:46
Speaker 1: They're not crippling the grid. They're enhancing the grid and
35:49
Speaker 1: then make sure we put them where people actually want
35:52
Speaker 1: to work and make sure they're real jobs there and
35:55
Speaker 1: make sure they're paying the local residents a bigger share
35:59
Speaker 1: of the benefits. So the cost benefit analysis is positive
36:02
Speaker 1: for the local area, for the regional area, and then
36:04
Speaker 1: for the state and federally. Um, to me, that's a
36:08
Speaker 1: win-win and we get, we unlock, I don't know, a hundred,
36:11
Speaker 1: $ 150 billion, a new investment in Australia. We unlock another
36:15
Speaker 1: 50 to 100 billion of new renewable energy and battery projects.
36:20
Speaker 1: That underpins economic growth sustainably for Australia for another decade.
36:24
Speaker 1: That's a win for me.
36:26
Speaker 2: It sounds like a win. I suppose there's a bigger
36:29
Speaker 2: issue as well in that we're talking about AI and
36:35
Speaker 2: I've heard people say that the goal of AI or
36:38
Speaker 2: the only way to make it financially viable is is
36:42
Speaker 2: to basically eliminate hundreds of millions of people's jobs. And
36:47
Speaker 2: there's also risks about what it poses to humanity in
36:52
Speaker 2: terms of, you know, it could be a threat to democracy.
36:59
Speaker 2: But I suppose the question is, are we going to,
37:05
Speaker 2: really benefit if AI takes all our jobs? I mean, you,
37:09
Speaker 2: you talked about that, uh, project in the Western towns,
37:11
Speaker 2: potentially employing up to 1400 people, but if thousands of
37:16
Speaker 2: people have to lose their jobs because of AI for
37:20
Speaker 2: it to become profitable, is that equation worth it?
37:27
Speaker 1: Ben, you you've nailed it. It's beyond my pay grade.
37:29
Speaker 1: I was only talking about the infrastructure to actually power AI.
37:34
Speaker 1: the bigger social license issue. Are we ever going to
37:37
Speaker 1: stop the tech pros of America dominating the world? Six
37:41
Speaker 1: people who were never elected now control the Western world.
37:45
Speaker 1: They don't control China. China's making sure of that, but
37:48
Speaker 1: China's building its own AI global leaders. But China is
37:52
Speaker 1: actually putting guardrails on it. They're saying we've got to
37:55
Speaker 1: pass the greater good test and they are putting constraints
38:00
Speaker 1: on In other words, China is trying to preempt the
38:03
Speaker 1: risk that America, I think it's already lost. We've lost
38:06
Speaker 1: that race. Who's more powerful, the president of America or
38:09
Speaker 1: the tech bros or who's actually controlling the president of America?
38:14
Speaker 1: That's beyond my pay grade. At the end of the day,
38:16
Speaker 1: we're not going to stop the AI revolution. Good luck
38:20
Speaker 1: to Minister Ayers as the science minister. He has to
38:22
Speaker 1: try and do that. He has to make sure that
38:25
Speaker 1: we actually see this as a benefit for humanity. I
38:28
Speaker 1: was only talking infrastructure. and power. I was not talking
38:33
Speaker 1: about the big issue that you just did. And I
38:37
Speaker 1: am fearful about that. I think it's too late. The
38:39
Speaker 1: idea that we're going to somehow stop the tech pros
38:43
Speaker 1: of America controlling everyone in Australia, all our data, all
38:48
Speaker 1: of our compute, sending algorithms, taking all of our artists
38:54
Speaker 1: and authors' IP, all of the media's IP, and then
38:58
Speaker 1: just start scraping it and taking it offshore and controlling
39:02
Speaker 1: it and not paying for it. Good luck to the
39:04
Speaker 1: federal government. I'd love them to stand up to the
39:06
Speaker 1: tech pros. Their history suggests they're not powerful enough. The
39:11
Speaker 1: tech pros are already, they need to get reelected. We
39:14
Speaker 1: are a democracy. I do agree with you. It's a
39:16
Speaker 1: threat to democracy, but I don't want to end on
39:19
Speaker 1: a really bearish note. That's just beyond my pay grade.
39:22
Speaker 1: It is a threat we have to collectively understand and
39:25
Speaker 1: we've got to give the government more power. Governments are
39:28
Speaker 1: great at stuffing things up, but they're the only way
39:31
Speaker 1: Australia can protect our sovereignty, in my view. So we've
39:34
Speaker 1: got to support them.
39:35
Speaker 2: Well, it's been great having you on the podcast, Tim.
39:37
Speaker 2: Thanks a lot for your time.
39:38
Speaker 1: Thanks very much for having me, Ben.
39:39
Speaker 2: Don't forget to subscribe to Stress Tested on YouTube or
39:42
Speaker 2: your podcast platform of choice. It helps us grow the
39:44
Speaker 2: show and get even bigger guests.