Pocock proposes 5% levy on data centres, PBO costs $3b benefit
Pocock has proposed a 5% levy on data centres over 5MW; the PBO costs it at ~$500m over four years and a possible $3b benefit by 2036-37.
ACT Senator David Pocock used a National Press Club address on 21 October 2026 to propose a new 5% levy on large data centres, arguing hyperscale operators such as Amazon, Microsoft and Google should pay more for the value they draw from Australian infrastructure. The Canberra Times reported the levy would apply to data centres drawing more than 5 megawatts from the national grid, on top of existing taxes and council rates, but would exclude co-location centres that lease racks or compute capacity to non-hyperscale customers. It is a proposal only, floated by a single crossbench senator, with no bill yet before parliament.
Why it matters
Pocock represents the ACT, so a push for new federal revenue from AI infrastructure is being made from a Canberra seat, even though the proposal names no specific data centre site in the territory. The timing is pointed: NEXTDC, Australia’s largest listed data centre operator, paused trading days earlier after Melbourne activism halted expansion works at some of its sites, and the collapsed sharemarket float of Firmus has unsettled sentiment across the sector. Pocock framed the levy as a chance to avoid repeating past resource-boom mistakes, saying, “We have to get better as a country at capturing long-term benefit and setting the terms of engagement.” He pointed to Australian Taxation Office transparency data showing some hyperscale operators paying effective tax rates of as little as 1 to 4%, and said the federal government has been dazzled by US AI companies while underestimating community concern. Neither the ACT Government nor the federal government had responded to the proposal at time of reporting.
The numbers
The Parliamentary Budget Office costed the plan at just under $500 million raised over the next four years, rising to a potential net benefit of just under $3 billion by 2036-37. The PBO attached a high degree of uncertainty to that longer figure, citing limited data on local data centre revenue, customer composition and future market development, and noted the levy would need to start within the coming year for the costings to hold. Amazon Web Services and Microsoft have between them pledged around $45 billion toward local data centre investment, The Canberra Times reported. The PBO modelling behind the proposal expects hyperscale users to make up to 65% of the market. Belinda Dennett, chief executive of Data Centres Australia, pushed back on the industry’s behalf, arguing capital is mobile and global customers have choice, and warning that stacking a new sector-specific levy on top of the infrastructure costs operators already wear could make Australia less competitive for investment.
What’s next
No legislation has been introduced. This is Pocock’s proposal alone, built on PBO costings he commissioned, and it has not been adopted by the government, the opposition or any ACT territory body. The next test is whether it survives contact with parliament, either as a private senator’s bill or folded into a broader federal budget debate, within the PBO’s own timing constraint that the levy would need to start in the coming financial year to deliver the costed numbers. Any such levy would apply nationally, across NEXTDC’s full footprint, including projects such as its Horsley Park data centre expansion in Sydney, now before the state planning system.