The Tickford Racing driver ran fourth last in the single-lap dash for pole, but had a slight tyre advantage over his rivals after getting through qualifying on a single run.
That meant he had a green set of rears and a set of fronts only roaded over an out-lap heading into the Shootout.
He put that advantage to good use, too, charging to pole with a 1m13.860s that left him three-tenths clear of the field.
"I'm super happy with that," said Waters. "It was all down to [Turn 2], I just had to get through there and I knew I had a tyre advantage that would save me for the rest of the lap.
"I'm excited for the race. The car wan't too bad yesterday. If we start a bit further up and run our own race today, I think it will be lot different. We'll put the super soft on at some point and see how we go."
Provisional pole winner Will Davison was second fastest on the road, edging teammate Anton De Pasquale by a tenth.
However it is De Pasquale that will start alongside Waters on the front row, Davison bumped back to third by a one-place grid penalty for impeding James Courtney in qualifying.
Race 1 winner Shane van Gisbergen will start on the outside of the second row, while James Courtney and Chaz Mostert were fifth and sixth.
Jack Le Brocq dropped four spots compared to qualifying and will start seventh ahead of Scott Pye.
David Reynolds was ninth as Thomas Randle ended up 10th in what was his first ever Shootout appearance.
The second leg of the Townsville 500 kicks off at 2:45pm local time.
