Wastewater systems in Australia are designed to efficiently transport the 3Ps (Poo, Pee and Paper) from households for treatment and safe disposal. With increasing water shortages, government policies are focusing on alternative sources of water such as recycled water to reduce freshwater demand and Circular Economy (CE) adoption. This chapter examines Australia's water and wastewater policies to assess how they incorporate the 6Rs (Rethink, Reduce, Remove, Reuse, Recycle and Recover) of circular economy strategies into the built environment. The analysis reveals that most of the policies focus on the use of recycled water for non-potable purposes and there is very limited use of recycled water in construction and built environment when this sector is responsible for 15–20% of the total freshwater use in Australia. The major challenges to achieving circularity in the water system are inconsistent regulations on water uses, conventional water and wastewater management systems that impede the utilisation of recycled water, lack of effective education and training among the construction practitioners and absence of metrics and tools to quantify the benefits. Given the economic focus of the construction and built environment sector, adequate attention is needed to address these challenges while developing and implementing water and wastewater policies.