Data centre companies AirTrunk and Goodman fronted a Senate committee in Sydney on Tuesday, saying they were working closely with governments to reduce their carbon footprints and earn their social licence.
But across the country, local councils said land that should be for homes and local businesses was being snapped up for tech development, and there was little they could do about it.
"There's unconstrained growth at the moment. They're just coming at us. There's no strategic plan," Willoughby City Council major Tanya Taylor told the inquiry.
The federal government announced in August it would work with state counterparts to implement nationwide standards for data centres, used for artificial intelligence networks, and regulate energy, water and land use, but they are yet to be enacted.
Councillors on Tuesday outlined a slew of projects they said were hurting their communities, including plans for a data centre in Lane Cove just 20 metres from houses for which the local council did not have a right of refusal, and a proposed development next to a metro station in Macquarie Park.
There was also a large centre planned near Sydney's CBD, which would drain the resources needed by developers wanting to build 8000 homes in the area.
The developers would need to build their own power supply for the homes, to be located in Ultimo, pushing up real estate prices as a result.
Residents and local authorities felt they had no say over where data centres were built and whether they were able to help the economy, City of Sydney deputy mayor Jess Miller said.
"We are displacing heavily productive land for nothing," she said.
"It's not as if we are being naive about this not happening at all, ever, but it's got to be done in a way that recognises opportunity."
States are responsible for approving the construction of most large-scale data centres, bypassing local councils because of their size and complexity.
On Tuesday, Victoria said it would crack down on data centre zoning and energy use, in one of the most significant moves on the developments from a state jurisdiction.
Data centre companies told the inquiry they were ready to work with authorities, though they were hesitant to outline clear plans.
"We strongly encourage a very high bar to be set for the development of data centres with regard particularly to engagement with the local community, energy and water usage," AirTrunk vice president Tom Mackellar said.
Jess Miller said restrictions needed to be implemented on a regulatory level so local councils had a lever to pull.
She called for a national transparency framework so councils could ask for changes based on evidence, rather than "making things up on the fly".
It was also important for land optimal for data centres to be identified, she said, instead of sucking up residential space.
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