'But that's the beauty of a tri-series, we still have a chance to make the final.
The tournament now moves across to New Zealand with the Kiwis facing England in Wellington on Tuesday, February 13.
That is despite Australia fielding a side shorn, Warner aside, of all its Test stars ahead of the forthcoming series in South Africa.
Speaking after his side's seven wicket victory over England at the MCG Warner said: "Our players have been in tremendous form coming off the Big Bash League, they are playing with freedom and they're playing fearless cricket".More news: Colts GM: Patriots 'Rivalry Is Back On' After Josh McDaniels Backs Out
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"We haven't showcased our ability as we know we can yet and there's guys in that dressing room who'll be determined to come back strong".
England's performance represented a significant downturn from Wednesday's, when they started brightly with the bat and conjured some late drama with a spirited display in the field. "I don't think we quite know the extent of it, so we'll wait and find out", added the stand-in skipper.
Australia's Kane Richardson removes England's Jason Roy early as the hosts take control of Saturday's tri-series match.
After winning the toss and electing to bowl, stand-in skipper David Warner left England reeling at 3-34 in the fourth over when he ran out Dawid Malan with a brilliant direct hit. "We never really felt like we had enough (runs)". "I struggled, I was trying hard and it didn't manage to work".
The visitors lost 5 for 18 through their middle order and that could be extended to 6 for 33 if we include the fall of captain Eoin Morgan. "I'll have to improve and look at where I went wrong".
D'Arcy Short (36no) and Glenn Maxwell took a few overs to get themselves in before taking 39 off two overs, England spinners Adil Rashid and Liam Dawson feeling the full force of the two Aussie power-hitters.