Australian Water Resources 2005 is the National Water Commission's baseline assessment of Australia's water resources in 2004-05, the first year of the National Water Initiative. This assessment synthesises information at the national scale to increase the understanding of Australia's water resources, and identify knowledge gaps that reduce Australia's ability to manage water resources effectively and sustainably. It has targeted five objectives of the National Water Initiative that require information on water resources for successful implementation: statutory provision for environmental and other public benefit outcomes, and improved environmental management practices, complete the return of all currently over allocated or overused systems to environmentally sustainable levels of extraction, water accounting that is able to meet the information needs of different water systems in respect to planning, monitoring, trading, environmental management and on-farm management, policy settings that facilitate water use efficiency and innovation in urban and rural areas, and recognise the connectivity between surface and groundwater resources and connected systems so they can be managed as a single resource. There are two levels of assessment: Level 1 assessment provides high level performance indicators of Australia's water management, based on information provided by the states and territories. A summary of Level 1 results is presented here. Level 2 assessment will provide data, analysis, and discussion to progress understanding of water availability, water use, and river and wetland health. Products of the Level 2 assessment will include integrated surface water and groundwater balances for 50-70 priority catchments, capital cities, basins and regions, comprehensive statistics on water use in 2004-05 and a new framework for a national assessment of river and wetland health, building on existing state approaches.