The Conversation, CC BY-SAAustralia is in the middle of a data centre construction boom. Driven by artificial intelligence (AI) and growing demand for digital services, global technology companies are expected to invest up to A$150 billion in Australian data centres by 2030.The scale of the investment is hard to ignore. However, a more important question is whether Australia will benefit from higher productivity and economic growth, or simply from a brief construction boom.Data centres can create jobs, strengthen digital infrastructure and support AI development. But they can also put pressure on housing, electricity networks and skilled labour.Data centres have existed for decades. But something has changed, and this essential infrastructure is now at the centre of a major policy debate. This article is part of The Conversation’s series on data centres – what they are, why we need them, and why they’re suddenly so controversial.Why is Australia a favoured location?Data centres are packed with computers that store, process and move digital information, the backbone of cloud computing. In theory, they can be built anywhere, so why does big tech have Australia in its sights?Australia offers several advantages for global technology firms. It is politically stable, has strong institutions, and sits close to the fast-growing Asia-Pacific region.The direct economic benefits are significant. Construction projects create work for engineers, electricians and builders. They also increase demand for materials, electricity infrastructure and specialised equipment.Yet the boost to economic growth may be smaller than the headline investment figures suggest. A large share of the spending goes towards imported goods, rather than production in Australia: servers, processors, chips and networking equipment. That means much of the money leaves Australia and does not reach the local economy. The hidden costs of the boomEvery major investment boom comes with trade-offs. One of the biggest risks is competition for construction labour. Data centres require many of the same workers needed to build houses, roads and renewable energy infrastructure.Australia already faces shortages of up to 72,000 electricians, engineers and skilled trades. There are media reports that electricians with just two years’ experience are being offered salaries of $200,000 a year to work on data centres.If data centres hire more of these workers, labour costs could rise across the economy. Housing projects may become more expensive, infrastructure projects could face delays and renewable energy developments may struggle to secure workers. This matters because housing affordability remains one of Australia’s biggest economic challenges. Power, water and land are also under pressureAs more data centres are built, demand for electricity and water will increase. If supply doesn’t keep pace, prices could rise for households and businesses.Land use is another challenge. Some sites allocated for data centres might otherwise have been used for housing, logistics facilities or other productive purposes.These costs do not necessarily outweigh the benefits. But they form part of the economic trade-offs policymakers need to consider.The inflation riskThe Reserve Bank of Australia has raised concerns about capacity pressures in the Australian economy and noted data centres could contribute to inflation in several ways.First, stronger competition for skilled workers may push wages higher in construction and related industries. Second, increased demand for construction materials could drive up project costs across and increase prices in the economy. Third, a large inflow of investment can add to demand at a time when policymakers are trying to keep inflation under control. These factors could make it harder for the Reserve Bank to bring down inflation, which is well above the 2-3% target band.A surge in copperData centres also use large quantities of copper for cables, power systems and cooling equipment. As data centres are built around the world, demand for copper is expected to grow. S&P Global forecasts that total global copper demand will surge by around 50%, climbing from 28 million metric tonnes in 2025 to 42 million metric tonnes by 2040.Higher copper prices will benefit Australia’s miners. Indeed, BHP, the world’s largest copper producer, said last month copper contributed more than half of its earnings for the first time, overtaking iron ore, as the price of copper surged almost 50% in the year.But there is also a downside. More expensive copper raises costs for domestic construction projects, electricity networks and renewable energy developments.This highlights a broader theme of the data centre boom: the same economic trend can create gains for some industries while imposing costs on others.Who captures the value?Perhaps the most important question is who captures the value data centres create.Owning the buildings does not necessarily mean owning the technology. Many data centres are operated by multinational companies that also control the software, intellectual property and AI systems running inside them.If Australia hosts the infrastructure but develops few local AI-related capabilities, much of the long-term value may flow overseas. As assistant minister for the digital economy, Andrew Charlton said recently:Simply building data centres in Australia does not necessarily mean that Australia captures the economics of AI. We can supply the land. We can supply the electricity. We can host the machines. And still find that much of the value […] flows offshore.The biggest gains are likely to come from building domestic expertise in AI, software development and digital services. How do we maximise the benefits?The key policy question is how to maximise the benefits of data centres while minimising the costs.This means expanding the supply of skilled workers, electricity infrastructure and industrial land so that construction does not crowd out housing, renewable energy and other important investments.Training more electricians, engineers and technical specialists will be part of the solution. But training takes time. In the short term, carefully targeted migration policies may help ease labour shortages in critical occupations.Australia’s data centre boom brings investment, jobs and the promise of a sophisticated digital economy, but it also creates new pressures on housing, energy and skilled workers.The real challenge for policymakers is ensuring Australia captures enough of the value these investments create. If governments strike the right balance with their policies, the current boom could boost productivity and strengthen Australia’s position in the global digital economy. However, if they do not, Australia may find that the benefits of the construction boom are fewer than the investment figures suggest.Jak Kakhkharov does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.