- NSW government removed enthusiasm over OpenAI’s arrival due to staff concerns about AI risks.
- Despite initial excitement, government still sees Sydney as a hub for tech investment and innovation.
- Documents reveal detailed efforts by NSW officials to attract major US tech companies like OpenAI.
- Growing community concern over datacenters' environmental impact amid push for AI development.
Government's Initial Enthusiasm and Cautions
In August last year, the NSW government expressed 'absolute thrill' at the prospect of OpenAI opening its first Australian office in Sydney. However, staff discussions highlighted concerns about potential dystopian outcomes, such as an artificial intelligence system resembling Skynet from the Terminator films.
Government's Strategy and Efforts

Despite these reservations, government documents show how vigorously officials pursued OpenAI’s presence, highlighting Sydney's attractiveness for startups and its significant role in Australia’s tech ecosystem. The NSW government also aimed to showcase other major US tech companies with Australian headquarters, emphasizing the region’s strong Al business presence.
Emissions Concerns and Regulatory Scrutiny
While courting OpenAI, state officials were aware of potential environmental risks associated with data centers. A meeting in May 2026 revealed that simultaneous operation of backup generators by multiple data centers could lead to extreme air pollution events, significantly higher than normal levels.
A spokesperson for the NSW government stated: 'The state is committed to embracing AI opportunities while ensuring emerging technologies are used responsibly and in public interest.' The government is currently developing a strategy on datacenter development to support the growing AI sector but has yet to announce its release date.
Source: The Guardian





