AI infrastructure that benefits Melbourne businesses

AI infrastructure that benefits Melbourne businesses

Personal submission to the City of Melbourne

Alex Carpenter | 02/10/2026

Consultation: Data Centres and Artificial Intelligence Infrastructure: Draft Position Paper for Community and Stakeholder Consultation

Purpose of this submission

Thank you for the opportunity to contribute. I am a PhD researcher studying how Australian small and medium enterprise leadership teams frame and respond to AI. I make this submission in a personal capacity.

I support developing AI infrastructure that Melbourne businesses can use, with new renewable generation, proportionate water requirements and timely approvals. My main suggestion is to give practical business capability a clearer place in the assessment of local benefits, and to retain a role for substantial public investment where that investment secures a clear public benefit.

The draft concerns physical infrastructure, with council acting through local planning, partnerships and advocacy to other governments (City of Melbourne, 2026, pp. 5, 10). My comments follow its four proposed positions and distinguish changes the City can pursue locally from matters for state and Commonwealth advocacy.

Position 1 Plan and guide suitable locations

I support assessing whether a proposed location is suitable for the facility's actual requirements and effects. The draft asks proponents to establish a functional need for locations in strategic precincts, including Fishermans Bend (City of Melbourne, 2026, p. 14). That should be a practical assessment of the proposal, its alternatives and the benefits it would deliver.

The City should consider how infrastructure supports businesses alongside its direct employment and land requirements. A facility's contribution should be demonstrated through credible relationships with the organisations that will use it. Claims about innovation or productivity need enough detail to explain who benefits and how.

Protecting land for housing and other valuable uses deserves serious consideration. Where a different location can deliver the required capability with fewer local constraints, government and industry should work through that option promptly. Where a proposal is suitable, the planning process should provide a clear route to development.

I would favour early coordination between the City, state agencies, utilities and proponents. Identifying the location, connection and design requirements together would help avoid a sequence of separate objections that each arrives after the previous one has been resolved. The objective should be to find workable sites and conditions while giving affected communities clear information.

Position 2 Update the planning framework

I support requirements that reflect the scale, function and actual impacts of a proposed facility. A clear account of what evidence is required, who assesses it and what would resolve a concern would help both proponents and communities.

The City should advocate for planning and utility decisions to be coordinated, with information reused where it has already been supplied and remains current. Proportionate assessment can protect amenity and infrastructure capacity while reducing avoidable uncertainty. Requirements should make responsible development achievable.

The economic cost of delay also belongs in the assessment. In my view, the opportunities forgone through unnecessary delay are a larger concern than continued overseas dependence alone. That does not justify approving every project. It does support making timely decisions, pursuing practical changes and recognising the value of capability that businesses are waiting to use.

Position 3 Improve governance transparency and data

I support public reporting that makes material project commitments and actual performance understandable. Communities should be able to see what is proposed, what resources it requires, who pays and what benefits are expected. A forecast should be clearly distinguished from a commitment and from an achieved result.

Reporting should concentrate on information that helps assess local effects, infrastructure needs and delivery of promised benefits. The City should advocate for consistent reporting across governments so proponents can provide the same verified information once wherever possible. Appropriate protection for confidential and security-sensitive information should remain part of that approach.

Assess claims of Australian control carefully

Where an infrastructure proposal claims sovereign capability as a public benefit, I would like that claim to be tested in practical terms. My priority is that every Australian business, including those in Melbourne, should have an option to use capable AI models served within Australia under Australian control.

For inference, which is the use of a trained model to produce an output, the relevant question is whether an Australian operator can legally and practically continue running an agreed model if its overseas partner withdraws access. A local building and local storage do not establish that ability by themselves. The location of model training does not settle it either.

The City can apply that distinction when considering claimed benefits and in its advocacy to other governments. Different arrangements should be able to deliver the outcome. International partnerships should remain available, and businesses should be free to choose overseas services. This is a proposed test of a claimed infrastructure benefit, rather than a request for the City to regulate models or compel businesses to use a particular service.

Position 4 Manage environmental risk and ensure local benefit

Build renewable supply with new demand

I strongly support additional renewable generation to match data-centre electricity demand. The draft also proposes storage where appropriate (City of Melbourne, 2026, p. 16). Government, utilities and developers should use these investments to accelerate renewable supply and the network infrastructure needed to connect it.

Implementation should allow practical coordination of new demand, generation and connections. Where their timing differs, the responsible parties should establish credible arrangements for bringing them into operation. Project staging, changes to location and shared infrastructure may help resolve genuine constraints. The City should advocate for clear responsibilities and prompt decisions that allow viable projects to proceed.

Apply proportionate water requirements

Water requirements should reflect actual demand, cooling design and local supply. Low-water designs and suitable recycled-water supplies should enable development where they address the relevant constraints. Peak demand and performance during dry periods also matter to whether an arrangement is workable.

Where a genuine local constraint exists, government, the utility and the developer should examine practical options, including shared infrastructure or a more suitable location. The assessment should make clear how a proponent can demonstrate that the concern has been resolved. Protecting existing water security is essential, and a workable solution should lead to a timely decision.

Allow justified public investment

The draft proposes that proponents fund attributable energy, water and network infrastructure costs so those costs are not transferred to households and businesses (City of Melbourne, 2026, p. 16). I support a fair developer contribution and scrutiny of who pays. I would reconsider an absolute rule against any public or shared contribution.

If government wants lasting Australian capability and control, it should be prepared to invest substantially alongside private providers. This may include supporting electricity and water infrastructure. I accept that some costs may be shared through household and business utility bills where the contribution is explicit and justified by the public benefit.

The City should advocate for a transparent assessment of such proposals. It should explain the capability being secured, the developer's contribution, who bears the risks and why public support is warranted. This would allow governments to support a deliberate public objective while testing whether the proposed arrangement represents a reasonable use of public resources.

I do not support general subsidies for AI consumption. Businesses and other users should pay for the services they use, including a possible premium for Australian control and continuity. Public investment should help establish the capability and supporting infrastructure.

Make practical SME capability a local benefit

The assessment of local benefits should include whether businesses can put the infrastructure to useful work. Access to computing resources alone is insufficient. People need support to develop workflows, judge outputs and understand their responsibilities.

The OECD's 2025 study found that a third or fewer of SMEs using generative AI had taken measures such as staff training, internal guidelines or investigating legal issues. Respondents welcomed training support. The survey covered seven countries and did not include Australia, so it is not an estimate of Melbourne business practice (OECD, 2025). It supports taking implementation capability seriously alongside access.

Through its partnerships, the City could encourage providers, business organisations and training institutions to help SMEs develop and assess workflows relevant to their operations. Contributions should be judged by the capability businesses gain. Small firms with limited time and technical capacity should be able to benefit, and support should preserve their ability to make informed choices between services.

Recommendations

I recommend that the City of Melbourne:

• Help identify workable sites and coordinate planning and utility requirements early, with assessment proportionate to each proposal.
• Take the economic cost of unnecessary delay seriously and provide a clear route to resolving genuine constraints.
• Make material commitments, costs and achieved benefits visible through proportionate reporting, including careful assessment of any claimed Australian control.
• Support additional renewable generation to match demand and water requirements based on actual use, cooling design and local supply.
• Advocate for substantial, justified public investment alongside private funding where it secures a clear public benefit, while leaving users responsible for the AI services they consume.
• Treat practical implementation support and skills for SMEs as substantive local benefits of infrastructure investment.

References

City of Melbourne. (2026). Data centres and artificial intelligence infrastructure: Draft position paper for community and stakeholder consultation.

OECD. (2025). Generative AI and the SME workforce: New survey evidence. OECD Publishing.