Australia’s massive construction program is being amplified by a surge in new data centers that are fueling inflationary forces, according to Deloitte Access Economics, which reckons investment will be double the mining boom of more than a decade ago.

The project pipeline in Australia hit a record A$1.4 trillion ($975 billion) through September, Deloitte said in a research report that tracks existing and planned works. Spending on projects already underway or committed climbed to A$563 billion, the report said, led by transport as cities across the country build out new roads, subways and other projects.

The pipeline includes almost 40 new data centers worth A$141 billion, the report said, up by a third from a year earlier. That jump is exacerbating the economy’s capacity constraints as the construction pulls electricians and other workers away from competing tasks and bids up prices, Deloitte said.

“Data centers are the newest driver, but they’re being added to a pipeline that is already historically large,” said Sheraan Underwood, the report’s author. “Transport and social infrastructure investment is still elevated, and it now overlaps with the net zero transition and the build-out of the digital economy.”The Reserve Bank and government have repeatedly highlighted how business investment has been surprisingly strong despite the war in the Middle East driving up energy prices and squeezing households. That strength has in turn helped to push up prices, forcing the RBA to raise interest rates five times this year to try and curb inflation.

Data centers dominated new investments announced in the third quarter, Deloitte said, with the biggest single project the Western Downs Digital Park in Queensland, which US AI firm Anthropic PBC signed a lease for in September.

Brisbane, capital of the northeastern state of Queensland, was already in the midst of a massive construction boom as it prepares to host the Olympic Games in 2032. Sydney and Melbourne, meantime, are building new train lines and motorways to cope with swelling populations, adding to the existing demand.

The Bloomberg Australia PodcastAppleSpotifyYouTube While the build-out of data centers could reach A$150 billion by 2030, according to Commonwealth Bank of Australia, situating them close to cities is becoming increasingly unpopular and there has been pushback over their demand for water and electricity. The energy-hungry facilities require reliable around-the-clock power supply, just as Australia is retiring aging coal plants and relying more on variable wind and solar.

Unless investment in generation, storage and grid capacity keeps pace, the planned expansion could be delayed.

Last month, the developer of what’s set to be one of Australia’s biggest data centers was hit by power supply problems, highlighting how access to electricity could become a bottleneck for the rollout of artificial intelligence infrastructure.