Amazon repackages the old and the unknown into a golden future for NZ

Tuesday, 2 September 2025

ANALYSIS: The announcement of new data centre capacity for New Zealand - capacity occasioned by this country’s rapid adoption of the kinds of tech tools that will increase our productivity - is cause for qualified optimism.

An announcement that had already been made five years ago, about secretly located data centres mired in consenting difficulties and run by a giant global tech company with a back door to the US government and a reputation of opacity, is somewhat less so.

Journalists are accustomed to old announcements being dressed up as something new - budget announcements under successive governments, for example, are classics of this genre.

But Tuesday morning’s missive from Amazon Web Services really hit it out of the park.

The new part of the announcement was the fact New Zealand was being reclassified into an “infrastructure region” by AWS rather than what it is more commonly known as by the man or woman on the street - a country.

Rather than have three data centres in New Zealand, the opening of which have already been heralded, the announcement means New Zealand will have three “availability zones” within the one “infrastructure region”. Each zone has its own power, cooling and networking infrastructure, so that if one zone experiences an outage, then the same power from the remaining zones can kick in.

That’s good obviously - in a country where natural disasters are commonplace, we want data centre infrastructure to be, in layperson parlance, “backed up”. But the announcement hints more at a restructuring of existing operations than a bombastic new development that will imminently lead New Zealand into a golden age of prosperity.

Existing operations? Indeed. The kicker here is that these data centres have already been built and are already staffed. The billions these data centres will plough into our economy will not go into our woebegone construction sector, but rather, pay the enormous power bills generated by highly power-hungry data centre operation.

Yes - Amazon Web Services is somehow classing its own paying of its power bill as an investment in New Zealand, a master class, if ever there was one, in what might charitably be called “narrative management”.

Nor will the new “infrastructure region” be hiring reams of staff any time soon. As well as being staffed already, they require fairly minimal staffing in any case. After questioning, AWS supplied a quote to a Post reporter, saying the generation of 1000 full-time jobs “include both AWS direct employment as well as non-AWS employment in sectors supporting AWS infrastructure, such as telecommunications, non-residential construction, electricity generation, and data centre personnel”.

Will the leaf-removing handyman servicing the pool belonging to the chief executive of AWS New Zealand also qualify as new employment under this very open-ended description? Quite possibly.

The kicker is that all of this was already announced in 2021, but packaged up as if it was a new development.

None of that stopped Prime Minister Christopher Luxon enthusing about these figures and statistics on the radio on Tuesday morning. The PM did not “announce” it per se, but he did present it as a vote of confidence in how amazeballs New Zealand is as an investment destination, building on a theme introduced yesterday in which a slight tweak in an investor visa category to allow a small number of people to buy a very finite number of houses priced at over $5 million was also the portent of a golden tomorrow.

More to the point

There are more questions raised about data centres than answered by their proprietors, and they have never been fully answered, neither in New Zealand nor elsewhere.

The main ones are about the environmental impacts of this infrastructure. Indeed, the mass adoption of generative AI has occasioned a fast proliferation of data centres, but each of them chew through the amount of power required to power a medium-sized city. So much so, in fact, that in countries where it is allowed, small nuclear reactors are being commissioned to sit alongside them and power them.

AWS said this morning it had a long-term power supply agreement with Mercury, and it would be 100% renewable. But after being queried on it further, local boss Manuel Bohnet said the power was drawn directly from the power grid.

And he would not answer questions about how the centres were cooled - again, this is an environmental question mark, given the copious amounts of water generally used in this process.

New Zealand must do the deal with the data centre devil, because we want the productivity gains powered by this infrastructure, and indeed we stand to be left behind if we do not. AWS is a key player in providing this for New Zealand, and has said later this year it will be introducing new AI platforms so New Zealand businesses had access to platforms already available in many other countries. And this is a good thing.

But to the extent US companies feel they need any kind of social licence to operate - and it is arguable about whether the large tech companies do or not - it would help to employ a public relations strategy that did not rely on the goldfish-like memory of citizens or the opportunistic nature of politicians to make claims of beneficence that don’t really stack up.