Living in the shadow of a data centre: Residents demand compensation

Residents living across the road from a massive Melbourne data centre are demanding compensation, saying their homes are now exposed to noise, pollution and the risk of falling property values.

For Sebastian Leith, his home of five years was meant to be a long-term investment.

But living just metres from a huge data centre in Melbourne’s West Footscray has left him worried about what his property might be worth in the future.

The facility known as M3, operated by technology giant NEXTDC, sits directly across the road from his front door. And with plans to expand it dramatically, Leith fears things could get even worse for him and his neighbours.

“I can’t afford to have a significant drop in the value of my property,” he said.

“I’ve bought this at a rather late stage in life, and I have a fairly significant mortgage on it.

“I can’t, at this stage of my life, afford to lose a whole lot of equity in something and blow off a couple of hundred thousand bucks and go somewhere else and start up again.”

Leith is one of a growing number of residents questioning the rapid expansion of Australia’s data centre industry, as more communities find themselves living alongside infrastructure that is becoming increasingly important to modern life.

Data centres power everything from online banking and streaming services to artificial intelligence. And, as Australia looks to become a major player in the global digital economy, the industry is growing at an extraordinary rate.

There are currently about 160 operational data centres across Australia, with another 90 proposed or under construction.

But while the industry promises billions of dollars in investment and is seen as vital to Australia’s digital future, it’s also creating headaches for communities worried about electricity use, water consumption, noise and pollution.

In West Footscray, those concerns are no longer just theoretical. They’re happening right on residents’ doorsteps.

“I don’t think anyone expected something quite as big and quite as noisy and quite as polluting to be put on the doorstep, only 50m away from our front door,” Leith said.

He believes the industry is moving too quickly, with residents left to deal with the fallout.

“It’s sort of the modern-day gold rush,” he said.

“Data centres go out and they find a block of land. They stake a claim on that block of land. They lodge that claim with the government. The government ticks the claim, and they go out and dig.”

Leith says he has nothing against data centres themselves but believes they need to be properly planned and built in the right locations.

“They’re a necessary evil. They are going to happen, and we need to embrace how they happen.

“We are a premium data storage country. They could do so much for Australia. This one in particular has been handled so badly.

“If data centres keep trying to build in residential areas, they are going to keep on having the same issues.”

The compensation fight

Now, residents want more than promises from the company. They’re calling for a way out of their homes without being left financially worse off.

Sean Brown, from community group Citizens of Tottenham, is calling for a voluntary buyback scheme for all residents living within at least 500m of the facility.

The proposed compensation package would include:

• Property buybacks: The value of each home would be based on the latest Maribyrnong City Council rates notice or an independent market valuation, whichever is higher.
• Purchase costs: Payment of equivalent stamp duty and associated fees to buy a comparable property.
• Moving expenses: Covering packing, unpacking and up to three months of storage, if needed.
• Additional compensation: A one-off payment of $10,000 per household to cover time off work and general inconvenience.

The group also wants relocation assistance for renters, including help with moving costs, time off work and compensation for the disruption.

For Leith, it’s about fairness and whether major corporations should take responsibility for the impact their developments have on the communities around them.

“You can’t put something this size, this detrimental to a community, this close to a community and not expect to get pushback and not expect that community to expect something back from you,” he said.

“Particularly when there’s billions and billions of dollars that are going to be made by the companies that are going to be storing their data in there.”

Research conducted by Primara Research for Airteam found that 83 per cent of Australians would not want to live near an AI data centre. Those who would consider buying a property nearby said they would expect an average discount of $35,163.

Airteam executive director Rich Atkinson says the findings put a dollar figure on the impact major infrastructure projects can have on everyday homeowners and their neighbourhoods.

He says those concerns need to be part of the conversation as Australia’s data centre industry continues to grow.

A $1.2 billion warning for the industry

West Footscray isn’t the only community pushing back against major data centre developments.

A proposed $1.2 billion data centre in Lane Cove, Sydney, backed by the Goodman Group, was cancelled following significant opposition from local residents.

Leith believes the West Footscray development has become a cautionary tale for the industry.

“M3 will be used as a textbook case of what not to do when building data centres,” he said.

And the dispute has already had a significant impact on NEXTDC.

On October 21, the company’s share price plunged 42 per cent after it downgraded its earnings forecast, citing delays to the expansion of its M3 data centre.

One of the major sticking points was a proposal to install 15m-high industrial power poles in local streets by electricity supplier Jemena.

The plans were put on hold following protests from residents.

NEXTDC chief executive Craig Scroggie on November 9, told an audience at the UBS Australasia Conference he was “deeply sorry” for the impact on the community, acknowledging residents had been “left behind”.

But Leith strongly disagrees with that description.

“We haven’t been left behind. We’ve been kept in the dark and manipulated,” he says.

He says he would like to see the chief executive personally apologise to the residents affected.

Despite the setbacks, NEXTDC hasn’t given up on its expansion plans making it clear the company remains determined to expand its M3 facility.

“We’ll provide an update when we have got that solution finalised and contracted,” Scroggie said.

“We won’t do it before the community and the council are crystal clear that we have made them and our customer the number one priority.”

A NEXTDC spokesperson told 7NEWS.com.au the company already engages with the community around M3 but intends to strengthen those efforts through a formal community engagement plan, overseen by the NEXTDC Board.

“The plan will establish a structured framework for ongoing, meaningful engagement with residents,” the spokesperson said.

The future of West Footscray

The proposed expansion would more than double the size of the M3 facility.

But the Victorian Government is yet to give the project the green light, with a final decision not expected until after the November 28 state election.

For residents like Leith, the uncertainty is taking its toll.

He accepts data centres will play an increasingly important role in Australia’s future. But he believes the industry needs to do a much better job of considering the people who live alongside these developments.

“One of the things I’m really pleased with is that we’ve had people look under the hood. When they are looking, they’re not really liking what they’re seeing,” he says.

As Australia’s digital economy continues to grow, the question facing communities like West Footscray is becoming harder to ignore: who pays the price for progress?

Watch documentary: The revolution: Inside Australia’s data centre boom here