DAN, Dr Jack, Chief Strategy Officer, CDC Data Centres Pty Ltd [11:22] CHAIR: Welcome. I understand that information on parliamentary privilege and the protection of witnesses giving evidence to this inquiry has been provided to you. I now invite you to make a short opening statement. I appreciate that you've provided something in writing here. If you'd like to provide anything to open up the discussion today, then we'll get underway with questions. Dr Dan : Thank you, Chair and the committee, for the opportunity to appear here today. For the record and for those of you that are listening to this and don't know the CDC, the CDC is the leading developer, owner and operator of highly secure, sovereign and connected data centres across Australia and New Zealand. We provide a critical digital infrastructure that underpins Australia's national security, social wellbeing and economic prosperity. Our data centres support government agencies and public and private sector organisations in delivering essential services, protecting sensitive information and strengthening Australia's national and economic security. Our evidence today is grounded in this role as the foundational critical infrastructure for the nation and the responsibility that comes with supporting systems that Australia relies on every day. This is why we place a very strong emphasis on security, resilience and availability. We are aligned with Australia's national interest and contribute to its long-term prosperity, and this includes designing, building and operating our facilities in the right locations sustainably and for the long-term benefit of the communities in which we operate. We support the Australian government's proposed national AI standards and welcome the opportunity to work constructively with the government and industry on their implementation. I'm here to answer the committee's questions. CHAIR: Thanks, Dr Dan. I'll kick off on the standards. We're talking about the foreseeable, huge uptake of data centres required in terms of the infrastructure for artificial intelligence, and, in particular, the potential for those big hyperscalers seeking to come here to train their models. From your perspective, what is your sense of the role of data centres as the AI infrastructure piece when it comes to the physical capacity around energy and water as they relate to the standards that the government is seeking to introduce? What's your sense of how that is being rolled out and the implications for the grid and for the community? Quite rightly, we hear a lot of concerns from the community around the social licence of data centres and the impost that they may or may not have on us. How do we make sure we are getting this right to maintain social licence but also contribute to potentially transition our energy grid? What's your views on that, Dr Dan? Dr Dan : How long have we got? CHAIR: Only a short period of time, sorry! Dr Dan : There was a lot packed in that question. Let me try and answer it with a couple of different lenses. First of all, I would say that the role of critical infrastructure is very critical for both the technology and the systems that we rely on every day. I think the committee would have heard this before that pretty much all of our lives are now intertwined with technology, whether it is the phone in your pocket, the laptop in front of you or all the systems you're relying on, on a day-to-day basis, when you're doing grocery shopping or when you're getting a medical prescription. That's because no-one is carrying folders with them anymore or getting paper forms, and that is a good thing. By the same token, as with any change and any evolution in any sector, there comes a point where you also have adverse impacts and we need to manage those adverse impacts. We've been around for almost 20 years. The business was started in 2007, and, until about last year, no-one really cared who CDC Data Centres was. No-one really cared what a data centre business actually was. Over probably the last six, nine, 12 months we have found ourselves being not only part of the national conversation but pretty much front and centre and on the first page of the national conversation. Part of that is driven by experiences overseas that potentially may not necessarily always reflect the specific regulatory settings in Australia. Part of that is frankly driven by bad behaviour in Australia, and I think for the community that looks around and sees examples of that bad behaviour potentially occurring in their community, they have absolutely the right to ask the questions. We have been we have been very, very clear in putting forward a position that doing infrastructure shouldn't be a trade-off to doing infrastructure well. In other words, developing these critical systems and developing the infrastructure behind it, can be done in the right way. It can be done, for example, without relying on significant water consumption. It can be done by contributing to the renewable energy transition and without raising prices for the customers. It can be done in a way in which we are contributing to more safe and well-paying jobs as opposed to competing with other sectors. We've been calling on the government to put in place the necessary settings to do so. In a way, that in and of itself is a little bit of a sad state of affairs because you would expect that the private sector would do the right thing. I think, by and large, many people in the sector are doing the right thing. I was talking to someone the other day and they were talking about the data centre boom. They were right in the sense that for any sector of the economy that is experiencing significant growth, it will attract a number of players that are entering that sector in order to get the financial outcomes as opposed to get the business outcomes. To the extent to which we can separate what is good development from what is bad development, we are absolutely strongly supportive of the government putting in place those rules to make it so. CHAIR: Deputy Chair, I'll go directly to you. Senator DUNIAM: Thank you very much, Dr Dan, for that. You just said there you're calling on the government to put in place the necessary settings. I'm very interested in what stakeholders, who are participating and for who it is we need to get the settings right for, view as right approaches, or, in your case, as you've just said, the necessary settings. In the simplest form possible, what advice or recommendations could we give to government to assist them, noting that of course a lot of the settings we're talking about are state and territory matters, in National Cabinet and agreements for standardised approaches? What could we be recommending that would help get those necessary settings in place? Dr Dan : I'm going to try and give you my answer. I don't purport to represent the entire sector or to speak for everyone, and I'm sure that you'll get a lot of additional inputs in that space. First of all, as you rightly indicated, it is important to identify that there are a number of stakeholders that have different responsibilities for different parts of the settings here. I'm making in particular the distinction between matters that reside with the federal government versus matters that reside with state governments. We have seen that state governments are already stepping up. The New South Wales government has put forward a framework for responsible data centre development, which has a very prescriptive but also very clear set of parameters around energy, around water—essentially, resource issues—around skills, around local content and so on and so forth. All those elements are absolutely important—emissions and noise—and I can keep going and going. Victoria has followed suit, and they have had their own individual areas of focus, primarily in response to some of the experiences that they have had in state. For example, they have put in place a particular measure with regard to the minimum distance between a data centre and a residential development. I think all these examples demonstrate that governments are already doing the necessary work to be able to understand what is important for the communities and how they are supposed to do that. In that context, I think the question becomes: what is the role of the federal government? As a company that has data centres and operations across a number of states and territories in Australia, we would like to see a more consistent approach across all the states and territories because that makes it a lot easier, obviously, for us but also for anyone that is looking to come to invest in Australia to have a national view of Australia as a country, as a single jurisdiction. Probably the last thing you want is to start having a game of arbitrage of who goes to New South Wales versus who goes to Victoria and so on and so forth. The Australian government, at the federal level, may also consider how it puts in place a system of vetting, potentially, providers across the nation. There are a number of good examples in this space. There's the clean energy Developer Rating Scheme, which actually looks at the performance of renewable energy developers and how they're doing from one development to another and whether they meet the requirements, whether they meet their commitments and so on. These are examples of ways in which we can provide a more uniform approach across the sector, because ultimately the goal is to raise the bar for everyone. Senator DUNIAM: I might on notice ask a couple of questions around specific things—noting that you don't speak on behalf of the entire sector or indeed the entire stack; that makes sense to me—that you might point to as helpful settings to actually get right, noting that key point around uniformity. You referenced New South Wales and Victoria; are either of those or any other jurisdictions doing parts of that approval and regulatory process better than anywhere else that you would point to and say, 'There'? Dr Dan : It depends on what you mean by 'better'. 'Better' can be a streamlined approach. 'Better' can be a rigorous approach. There doesn't need to be a trade-off between the two of them. We have seen that a number of jurisdictions like Western Australia are probably a lot more agile in terms of the speed of assessing particular developments. We have seen that the other jurisdictions, potentially New South Wales, are probably not as fast, but they are definitely very, very rigorous. In terms of outcomes, we're not competing necessarily on speed, although the lack of speed comes with an increase of cost on us, especially for large projects that cost billions or tens of billions of dollars. Once you start putting that money in the ground, so to speak, then you're paying interest on it, and you need to recoup that somehow. There are lots of examples of individual jurisdictions. I'm happy to come back to you on notice on various ways in which jurisdictions do things in parallel without compromising the quality and the rigour of the process, as opposed to things in parallel, in a serial way. That would be more helpful for the sector. Senator DUNIAM: Thank you very much, Dr Dan. CHAIR: Senator Pocock. Senator DAVID POCOCK: Thank you very much for your time this morning. I've never had a single complaint about CDC data centres in the ACT. Clearly you're doing things— Dr Dan : We aim to keep it that way! Senator DAVID POCOCK: well here. Given that and some of the concerns we're seeing from other proponents around the country about this rush for approvals at the moment, do you think that the new standards should apply to data centres currently in the planning pipeline or in development to ensure that we can maintain some sort of social licence? Dr Dan : I think what you'll find, Senator, is that quite a number of jurisdictions are already applying that lens to the developments under way. I'll give you the example of New South Wales, where the department of planning is, even if maybe not in an official capacity, asking all the right questions in terms of alignment with new guidelines that they have been developing. With regards to a particular position, I think that comes down to legal advice and what is fair and under the provisions of retrospectivity in legislation. You'd expect that, with the necessary social pressure and, with community expectations, it would be in everyone's interest to align with the new requirements as opposed to try and find loopholes and carveouts. Senator DAVID POCOCK: You're obviously providing sovereign Australian data centre capacity. You're partly owned by the Future Fund. Do you have any thoughts on how we capture long-term benefit from non-sovereign data centres, from multinationals that are that are building and operating data centres here in Australia? Dr Dan : It depends how you think about that value capture. In the infrastructure space, irrespective of whether you're an Australian company or an overseas company, you'll still have to use Australian employment. You still have to use the Australian supply chain to a degree. Sure, you can import a whole bunch of things, but ultimately, once you create the infrastructure here on the ground, it is going to stay here. In terms of moving up the stack and trying to capture some of the profits that go offshore, I think that is a question that is not in my domain, and I don't pretend to be an expert on that front, but I'll give you an analogy. Actually, I'll point you to a parallel case. I'm not sure if the committee knows, but one of the most densely populated, from a data centre perspective, regions in the world is in Virginia in the United States, where they account for probably more than a quarter of the global capacity or something crazy like that. The reason for that is because that was where the original internet connection points originated. That is essentially where networks and cables were connected. Data has a lot of gravity, so it started to come close to that in order to be easily processed, easily distributed and so on. That region has grown so much to be essentially almost like data centres HQ on a global stage. The point I'm trying to make is that infrastructure has a gravity. It attracts not only skills development jobs, employment and so on but the rest of the innovation sector around it. We heard earlier today the testimony from Monash University and about their MAVERIC supercomputer that is hosted in our data centre. One of the things that I remember hearing from them was the fact that they were absolutely flooded with requests from people to come and work at Monash because they have that capability. We want to be able to do that across all the capabilities that we're building in this country. Senator DAVID POCOCK: Finally, why did you agree to end your Project Southgate partnership with Firmus? Dr Dan : Our arrangements with Firmus began when their focus was a lot more on Australia and creating sovereign AI capability in Australia. Their business model has since evolved. Probably the most blunt way of putting it is that we have a very clear business model and a very clear mission for our company, and, when things start diverging significantly from that, we continue to follow our core mission. Senator DAVID POCOCK: Thank you very much. CHAIR: Senator Dolega. Senator DOLEGA: Thank you, Dr Dan, for coming across. Further in relation to Firmus, CDC chief executive Greg Boorer told the AFR, or it might have been Rampart, following your termination of your partnership with Firmus, 'CDC was misaligned with Firmus on its Australian plans, including its Tasmanian developments'. Which aspects of the Tasmanian developments raised concerns for you? Dr Dan : I appreciate that this is in your state. I want to make something very clear. Our arrangements with Firmus and the partnership with Firmus had been predicated on CDC developing a range of data centres for Firmus across Australia. Tasmania could have been part of that. But Firmus had a very different approach to developing data centres compared to CDC. CDC is very much about critical infrastructure, very significant resilience and essentially 100 per cent availability, and that comes with a certain degree of assurance, a certain degree of rigour and a certain degree of process which could have been construed as being a little bit too heavy for a more commercial type of development. CDC has not been involved in any developments in Tasmania and never intended to be involved in any developments in Tasmania. Senator DOLEGA: I was just curious about Mr Boorer specifically highlighting the Tasmanian developments. In some of your responses to the chair's earlier questions you mentioned positive developments for the communities, but you also cited 'bad behaviour'. Can you give me some examples of bad behaviour that you might have seen? Dr Dan : I'm going to be diplomatic on this one, on purpose, and refer you to the public coverage—whether data centres are not situated in the right location or the data centres are competing with other uses such as housing, residential developments and so on; whether data centres are trying to push their way through planning processes and threatening litigation and various other measures in order to get to an outcome and so on and so forth. Senator DOLEGA: I might ask you some questions on notice. I might pass back to the chair. CHAIR: I understand Mr Watts has a question he wants to ask. Mr WATTS: I was actually going to ask about the examples of bad behaviour! But, while I have the call, I would just reiterate what Senator Pocock said, in that I have at least two significant CDC data centres in my electorate. I have not received any complaints about them. I've had long experience of being briefed by CDC on these issues of energy use, water use and siting in a way that I've seen seriously grapple with these issues. I am keen to have a discussion about bad behaviour. Dr Dan : If I can respond to that, I'm actually keen to have a conversation about good behaviour, and I'm saying that because essentially I would like us to be part of a sector that demonstrates good behaviour from one end to another. I would like us to get to that stage where you have to try really, really hard to find examples of bad behaviour. Ultimately the price of Australia being able to develop good technology infrastructure, the price of being able to attract investment, the price of being able to activate a new innovative part of the economy is absolutely too great and too important for it to be sidelined by a couple of examples that mean that the community is so concerned about it that we lack the social licence to be able to continue to grow and develop. Senator DOLEGA: Can I just quickly say that I appreciate what you're saying, Dr Dan, about the need to focus on good behaviour, but this has been described by lots of evidence as a gold rush, and a part of making sure we have good behaviour is cracking down on bad behaviour. I really appreciate CDC's story, but it would be really good to talk. Sorry, Chair, I couldn't help myself. CHAIR: Thank you. Proceedings suspended from 11:46 to 12:14 .