The legal requirement for landlords is to pay for water supply as it is defined as "an essential service".

Local councils charge for water suply based on the diameter of the supply line which is part of the rates charge.

Accepted.

Water consumption is now charged for every litre by most councils or it has been privateised to water companies.

Is there any reason or legal barrier why the cost of water consumption may not be passed on to the tenant??

Lessors are able to pass on the full water consumption charges to tenants if:

the rental premises are individually metered (or water is delivered by vehicle),
and the rental premises are water efficient,
and the tenancy agreement states the tenant must pay for water consumption.

www.rta.qld.gov.au/Forms-and-publications/Fact-Sheets/General-tenancy-fact-sheets/Water-charging-fact-sheet

I thought in QLD there was an excessive usage clause so that the landlord can pass on the charge. I know I did 10yrs ago. Back then it was $70/quarter. Anything over can be passed on.

Yeah cisco has changed. More and more people passing on water in Qld. Just need wels3 compliant taps - receipt or photo enough. Weld 3 cistern and shower rose. Garden taps don't apply. Download fact sheet. Rental managers tried to tell me plumber had to Do total BS.
Also, here's a tip - if you don't want to replace a cistern but it looks plausible it would be wels 3 (most dual flush) just go buy one from Bunnings, take a photo of the box and receipt, then return it for a refund. Proof without costs

Move with the times QLD....move with the times.....