Prime Minister Anthony Albanese has called on Queensland to fall into line on a national plan governing data centres before Wednesday's national cabinet meeting, as he juggles mounting tensions over the GST, NDIS funding commitments and the regulation of artificial intelligence.
The push comes as Albanese prepares to chair a gathering of state and territory leaders that will canvass a broad agenda — including AI regulation, a stalled gun buyback scheme, and new measures to tackle domestic violence.
Queensland holds out on data centre energy rules
At the centre of Wednesday's AI debate is a federal plan to require data centre operators to generate renewable energy, designed to prevent the surging electricity demands of the sector from pushing up power prices for households and businesses. Queensland Premier David Crisafulli has so far refused to sign on, and the federal opposition, led by Angus Taylor, has backed the position that data centres should be free to draw on any energy source — including fossil fuels.
That stance threatens to unravel what had been a broadly bipartisan consensus on managing Australia's rapid entry into the AI and data centre boom. Albanese said he remained optimistic, telling reporters: "I'm confident we can get consensus."
The Prime Minister argued that without additional investment to offset energy demand, data centres risked displacing electricity supply and driving up costs — undermining the social licence needed for the industry to expand. Business groups have also thrown their support behind Labor's offset proposal, warning that failing to address energy and water usage could provoke a community backlash similar to what has been seen in the United States.
Federal cabinet examined the proposed national AI standards in Perth on Tuesday, with Albanese set to formally present the framework to premiers the following day. Agreement is understood to be broad across most jurisdictions — Queensland remains the notable exception. You can read more about Queensland's recent infrastructure commitments as the state navigates its relationship with Canberra.
GST deal and NDIS obligations fuel east coast tension
Albanese is also bracing for friction from east coast premiers over his renewed commitment to a GST top-up arrangement with Western Australia — a deal the Productivity Commission has described as a poor outcome for the country. The Prime Minister has sought to defuse the controversy by emphasising that the Commonwealth, not the states, funds the multibillion-dollar GST top-ups underpinning the WA agreement.
He has simultaneously reminded state leaders of their own obligations. In 2023, premiers struck a deal with the federal government to accept an extra $25 billion in hospital funding and approximately $10 billion in additional GST revenue, in exchange for states taking on greater responsibility for funding alternative services for children with autism and other developmental conditions — through a program known as Thriving Kids.
That 2028 start date is now in jeopardy. States have been reluctant to embrace some of the changes flowing from Labor's NDIS reform legislation, and the program's rollout is under pressure. When asked whether he would raise the NDIS with premiers on Wednesday, Albanese was blunt: "We remind them all the time."
The fiscal backdrop is significant. Federal debt has now exceeded $1 trillion, and both New South Wales and Queensland face the prospect of credit rating downgrades toward the levels currently held by Victoria. Albanese's broader fiscal commitments continue to draw scrutiny as budget pressures mount.
Business Council calls for productivity partnership
The national cabinet meeting follows Albanese's appearance at the Business Council of Australia's annual dinner in Sydney on Tuesday evening, where he urged corporate leaders to adopt a more optimistic public tone about the Australian economy. The Prime Minister pointed to a relatively low unemployment rate and economic growth outpacing most G7 nations, pushing back against what he described as excessive pessimism — pessimism he suggested was fuelling support for minor parties such as One Nation.
Business Council of Australia chairman Geoff Culbert used his address to call for a genuine partnership with government on productivity reform. "We are asking you to partner with us to take Australia forward," Culbert said, according to prepared speech notes, acknowledging that structural reform is difficult to prosecute within the constraints of political cycles.
Business groups are understood to be planning a coordinated, union-style campaign focused on living standards and economic growth ahead of the next federal election — a response to what some in the corporate sector view as an adversarial policy environment.
