Creating water sensitive cities is a stated goal of Australia's National Water Initiative; however, most Australian cities have made only limited progress toward this goal. This paper summarises an in-depth collaborative research project that sought to understand what is holding back investment in water sensitive cities and identify a road map to address the constraints. The project involved research academics, industry participants, and economic regulation agencies from all major Australian jurisdictions. The reforms identified that will move Australia towards a nation of water sensitive cities are: (i) strengthening government policy support for water sensitive urban design to ensure it has equal standing with other policy objectives; (ii) increased government investment for outcomes valued by the community (funded through general taxation or broad-based charges), accompanied by charges for those services used and valued by water utility customers; (iii) improvements to system-level accountability to ensure objectives are met; (iv) changes to the regulatory incentives faced by water utilities to ensure the services valued by customers and community are delivered; (v) removal of barriers to private sector participation in service delivery; and (vi) improved information systems and analytical capabilities to ensure appropriate water sensitive solutions are identified and delivered efficiently.