Data centres – how the land use of the future is being assessed against planning rules from a bygone era

In the year 2026, there are few hotter topics than data centres.

As the AI revolution continues at incredible speed, the supporting infrastructure in the background needs to go somewhere.  Across the industrialised world, enormous data centre proposals are generating local-level controversy, to the extent that they have become a major political issue at all levels of government.  The full extent of data centre controversy has arguably not reached Australia just yet, but it might not be far away.

In this context, it is fair to say that the planning system in Western Australia has not kept up with the pace of data centre rollouts and the underlying technological advancements.

In particular, the current default local planning scheme provisions, as set out in Schedules 1 and 2 to the Planning and Development (Local Planning Schemes) Regulations 2015 (WA) (Regulations), are now over a decade old.  At the time of these default provisions coming into effect, the average person would not have known what a data centre was and AI was something largely confined to science-fiction movies.

It is useful to consider how a standard data centre proposal is assessed under the current planning framework in Western Australia and to ponder whether this is adequate, for both developers of data centres and the landowners in close proximity to them.

What is a data centre?

According to a routine AI prompt and response, a data centre is a physical building or facility that houses computer systems, servers, storage drives and network equipment to store, process and deliver digital data and applications.

Modern data centres typically require a significant amount of space, which means that these buildings can have very large footprints.  It is also typical for the operation of modern data centres to involve a very large amount of electricity and water usage.  The cooling systems associated with data centres can give rise to significant off-site noise impacts.  Data centres tend to be far less impactful in relation to things such as traffic generation.  With the exception of built form and noise, the typical operation of a data centre could fairly be said to be quite benign in terms of impacts on surrounding amenity.

Based upon publicly available information, it seems that data centres can be very expensive to establish.  Indeed, the considerable levels of investment in data centre development have been welcomed by many within government as being an important economic driver.

Land use permissibility

In Western Australia, if a particular land use is deemed to be inappropriate for a particular location, then it will be a prohibited “X” use in the local planning scheme zoning table.  As things currently stand however, there will rarely be a clear-cut case of a data centre being a prohibited land use, owing to the lack of any clearly suitable definition in local planning schemes.

The current default land use definitions are set out in the “model provisions” in Schedule 1 to the Regulations.  Within the model provisions, there is no land use definition of “data centre”.  This begs the question of how a data centre proposal should be classified for the purposes of ascertaining land use permissibility.

To date, it has been frequently argued by data centre proponents that a data centre constitutes a “warehouse/storage” use, which is defined in the model provisions to include premises used for “the storage of goods”.  A data centre clearly involves goods in the form of computer equipment being kept within premises, but is it really “storage” when that computer equipment is being continually used?  It could alternatively be observed that a data centre involves the storage of data, but does data constitute “goods” or is that term intended to refer only to something tangible?

It could alternatively be argued that a data centre constitutes “industry” use, which is defined in the model provisions to include premises uses for the “processing” of “goods”.  Whilst a data centre involves the processing of data, the standard functions of a data centre are broader than that one activity.  As with the “warehouse/storage” definition, it is also unclear whether the term “goods” is intended to capture something intangible, such as digital data.

Under most zoning tables in local planning schemes, the land uses of “warehouse/storage” and “industry” are permissible in industrial zones (and perhaps in commercial zones), but prohibited in more sensitive areas, such as in residential and rural zones.  But these prohibitions are not the end of the story, given the uncertainty as to whether these land use definitions actually apply.

If a data centre proposal is instead classified as being a use not listed in the relevant zoning table, then by reference to clause 18(4) of the model provisions, it will strictly speaking be capable of receiving development approval in any zone, as a matter of discretion.  A similar position would apply in respect of any data centre proposed for land that is zoned “urban development” or “industrial development”, where land use is intended to be guided by a structure plan and is not bound by a zoning table and clause 27(2) of the deemed provisions (in Schedule 2 to the Regulations) would provide discretion to grant development approval in any circumstances.  A similar position would again apply to any data centra proposal over land that is reserved, rather than zoned, under a local planning scheme.

Built form controls

Most contemporary local planning schemes do not contain any built form controls that would dictate the design and dimensions of a proposed data centre.  Rather, the much more common approach is for built form controls to be set out in a local planning policy.  As a local planning policy is not a legally binding instrument, they do not provide built form controls as such and it would be more accurate to say that they provide built form guidance.

Many local governments in Western Australia maintain a local planning policy dealing with the built form of industrial development.  As a threshold issue, there can be doubt as to whether such local planning policies actually apply to data centres, given the uncertainty addressed above as to the correct land use classification.  Even if they do apply, these local planning policies have likely been crafted with things like traditional warehouses and factories in mind and they may not address many of the features associated with data centre development.

A local planning policy on industrial built form will often not contain any requirements in relation to building height, as tall buildings have not traditionally been proposed in connection with industrial land uses, but some data centres are designed in a similar manner to an office building and are designed up rather than out.  In terms of footprint, a local planning policy on industrial built form might control building size through plot ratio limits, but many definitions of “plot ratio” contain exclusions for equipment rooms, which can create confusion, given that a data centre is essentially one very large equipment room.

Absence of State planning policy

Notably, there is not currently any State planning policy on data centres in place in Western Australia, nor has any draft been publicly announced.  A State planning policy, where adopted, will essentially set out standard planning rules that apply throughout the State to proposals involving a particular subject matter.  In the absence of any State planning policy on data centres, the development of data centres in Western Australia will continue to be subject to whatever local planning framework happens to be in place in the relevant location.

Conclusion

As things currently stand, despite their technological importance, their economic value and the potential for controversy, development applications for data centres in Western Australia are being assessed against local planning frameworks that were conceived prior to the era of AI and large-scale data centres.

Whilst this might work fine in some cases, the disconnect may cause uncertainty and ambiguity in those cases where a data centre proposal generates a level of public opposition.  In such cases, having gaps in the planning framework helps neither the proponent nor the broader public.

To provide a greater level of certainty as to where data centres should go and how their development applications will be assessed, some obvious reforms that could be considered would include the adoption of a State planning policy on data centres, amending the Regulations to create a land use definition of “data centre” (for subsequent inclusion in any new or amended local planning schemes) and the adoption of local planning policies dealing specifically with the built form expectations of data centres.

Until that happens, the likelihood is that decision-makers will have to continue assessing data centre development applications as though they are basically warehouse-like structures that happen to contain high-tech computer systems.  Given the economic value of data centres and the rising levels of public opposition, this business as usual approach is arguably not good enough.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.