Interview with Patricia Karvelas, ABC Afternoon Briefing

Minister, welcome to the program. MURRAY WATT, MINISTER FOR THE ENVIRONMENT AND WATER: G’day, PK. Good to be with you.

PATRICIA KARVELAS: You've put a proposal to the water minister's meeting today to bar data centres from using large volumes of drinking water to cool their huge computer servers and also to limit the impact on household bills. Have you got their agreement? MURRAY WATT: I was really pleased, PK, that we got the agreement of the vast majority of states and territories today.

The Northern Territory said that they weren't in a position to agree today, but we've been having some very constructive conversations and I'm confident we can get there with them. It was unfortunate that Queensland was the only state or territory that refused to agree to national standards to manage the water use of data centres. I think that's a really big mistake for Queenslanders, and I think it's a big mistake for the country as a whole.

But I'm really pleased that aside from Queensland and yet to confirm with the Northern Territory, other states and territories, including Tasmania being a Liberal party state, have agreed to minimum standards for data centres and their water use. We recognise that data centres have a lot of advantages for Australia. There's a lot of economic opportunities and other opportunities as well, but we do need to manage the risks regarding data centres, particularly when it comes to water usage, because if we don't, that means the risk is that they will use large quantities of water that households need, that farmers need, that industry needs, and they of course risk also putting up water prices, which no one wants to see happen either.

PATRICIA KARVELAS: So you're saying Queensland was a hard no. So no negotiation from them? MURRAY WATT: That's correct, PK.

And look, we will obviously continue to talk with Queensland about this, and there will be a National Cabinet meeting to deal with AI and data centre issues later this month. So there's still an opportunity for Queensland to change their position running into that. It obviously is similar to the position Queensland took when it came to managing the energy use of data centres.

But as I say, I think especially in a state like Queensland, which is so decentralised, which has a big agriculture sector, I think a lot of Queenslanders would be concerned about their state government not agreeing with other states and territories to set minimum expectations for data centres, that they minimise their water use, that they prioritise non-drinking water, that they prioritize recycled water, and that they pay their fair share towards water infrastructure.

I think they're pretty basic principles that most people should be able to agree to, and I'd certainly hope that Queensland would change their position. PATRICIA KARVELAS: So are you saying that data centres might want to go to Queensland because the standards are lower? MURRAY WATT: That is possible that we will see some entrants to the market want to do that.

But what we've also heard especially from the major data centre players is that they support uniform national standards because they also don't want to see rogue operators come into the country that take advantage of lax standards. So this, by and large, has the support of the data centre industry. They want to see strong standards.

They want to see national standards. I think people in the data centre industry know that there is already community disquiet about data centre development, and they know it's in their interest to be able to demonstrate that they've got high standards when it comes to water use, just as they do want to have high standards when it comes to energy use as well. PATRICIA KARVELAS: Minister, will your legislation nationally compel them?

How does that work? How does that work legally in terms of what obligations are on them? MURRAY WATT: Yeah, we do intend to pass legislation at the federal level that will bind states and territories to have strong standards when it comes to water management.

One of the things that's a little bit different between water and energy is that water management is largely a state and territory responsibility. We don't get into setting water resource plans at the national level and things like that, that is done by states and territories. But that's why it's important that at the national level, we do have those uniform standards.

But yeah, we will be legislating to have these national standards. We just think it would be a lot better if this was done cooperatively with the support of every state and territory. We're almost there.

We've only got one at the moment saying they disagree, and we'll keep working to bring them on board as well. PATRICIA KARVELAS: Let me take you to the other one you mentioned and that's the Northern Territory. You say they still want to talk.

What concerns and guarantees are they seeking? MURRAY WATT: Look, I think the Northern Territory, like most of the states and territories, wants to make sure that they still do have a degree of flexibility and that they do retain the right to manage their water systems because that is how the system operates now. And we are very comfortable with that.

We're not seeking to take over the distribution or management of water from states and territories. Those responsibilities will remain with them. So I think that sort of thing is a concern to the Northern Territory.

I think in the end for the Northern Territory, and I've spoken again this afternoon with their minister, they just need a little bit more time to go through their internal processes. But he assured me that the broad direction that we're seeking to take is similar to where they want to go. So I'd be certainly hopeful that by National Cabinet, we may have a firm decision from the Northern Territory.

PATRICIA KARVELAS: Are you willing to give any ground or to compromise your national standards at the National Cabinet? MURRAY WATT: The short answer is no, PK, because all we are asking for and all we're saying in these principles is that data centres should be required to minimise their water use, prioritise non-drinking water, prioritise recycled water, pay their fair share towards any new water infrastructure that's required, transparently report their water usage.

You know, I'm not sure that any Australian would think we should compromise on those kinds of things. As I say, I think that data centres have a lot to offer Australia. We know that there is enormous interest internationally in investing in Australia when it comes to data centres.

We want to take that opportunity, but we want to take it while managing the rights of Australians and our values. And one of them, of course, comes down to careful water management. As I say, a very dry continent with drought around the corner, we need to manage these things sensibly.

And the vast majority of states and territories agree, and the vast majority of the data centre industry agrees as well. PATRICIA KARVELAS: I spoke to the New South Wales Premier on Monday, Chris Minns. New South Wales is on board with your standards, but he did say he is sometimes concerned about being held to the lowest common denominator across all jurisdictions.

He says New South Wales is still entitled to use its size and to stimulate economic growth and opportunity, and sometimes national agreements run counter to that pursuit. Do you need to be looser or strip down your standards? MURRAY WATT: Well, it certainly remains open to states and territories to go above these standards that we're setting, if that's what they choose to do.

What we're essentially doing is setting a floor below which water rules can't go below that. So if a particular state or territory wants to require more of data centres, that's entirely fine. The risk to the country arises if a particular state or territory decides to allow any data centre to come in, no matter how much water it uses.

And that’s the sort of thing that we're trying to prevent. PATRICIA KARVELAS: The other big issue today is the Productivity Commission, which has labelled the Federal Government's GST deal with Western Australia as a costly mistake and called for it to be reversed. Are you prepared to look at it?

MURRAY WATT: Well, we've certainly said in the run-up to the meeting that Jim Chalmers is having today with state treasurers that we will consider the report from the Productivity Commission, consider its recommendations. We've also made very clear though, that Western Australia will continue to get its fair share of GST revenue. Now, of course, I'm sure there will be a discussion about exactly what that ends up meaning, and I'm sure that Jim Chalmers will have more to say about how that's gone with the treasurers meeting today.

PATRICIA KARVELAS: Given the Productivity Commission is so clear in its recommendation, isn't to not follow it just pure politics? MURRAY WATT: Well, I mean, the national government has to consider the broader national interest. We have to consider the unique differences between states and territories.

It's not unusual to see different states and territories argue that they should be advantaged over others, and we're seeing that already play out when it comes to the GST debate. Our role is to try to bring each of those states and territories together to come up with a solution that works for the country as a whole. Now, the Productivity Commission report has been released this afternoon and everyone will be able to look at it, what its recommendations are.

They've put forward different options around the way forward. And again, Jim Chalmers and his team will be taking a close look at that and working very closely with states and territories to hammer out a solution. PATRICIA KARVELAS: Minister, thank you so much for joining us.

MURRAY WATT: Thanks, PK. We acknowledge the Traditional Owners of country throughout Australia and recognise their continuing connection to land, waters and culture. We pay our respects to their Elders past, present and emerging.