There is only one reason for such restrictions: the price of water is too low. Plenty of other goods in society are both important and scarce.
Almost every household consumes bread, milk and electricity daily, but without government restrictions on when and how they can be used. The trick with bread, milk and electricity is that the people who supply them charge a price that reflects the cost of production.
Presumably because it fears political backlash, governments prefer to set a price for water that is too low, and then employs a plethora of regulations to keep consumption down.
A better approach would be to raise the price of water, and let individuals choose precisely how they want to save on consumption.
Now that makes sense. And so simple, so obvious.
Think about it. If they manage to set the right price for water, it will force us- consumers- to decide how best to conserve water, let us decide us when we want to use water as well as how we choose to use it, and as Andrew points out, it could also create incentives for suppliers to find new ways of increasing the amount of water available.
In the long run, it just might be the best way to manage Australia's scarce water resources, particularly since there is no rush to develop new supply solutions.