Tony Abbott says Australia risks becoming a second-rate country unless the Senate accepts the need for economic and budget reform.
The prime minister is facing calls from within coalition ranks to lift his game, following a chaotic end to 2014 and an uncertain start to the new year.
Some party members suggest his resignation could boost the government's standing.
But Mr Abbott said the government had a good story to tell and its "main fault" was the inability to get legislation through the minority-held Senate.
He said the government had the right approach when it came to Medicare, university deregulation and reining in welfare and pension spending to balance the budget and pay off debt.
"In the end, this country does have to live within its means," Mr Abbott told Macquarie radio on Friday.
"We are at risk of succumbing to the European disease.
"We are at risk of becoming a second-rate nation living on its luck.
"It's not easy to fix these things."
Mr Abbott said the end of 2014 had been "a bit inelegant", but voters would see a "ton of energy" in 2015.
"I don't think anyone who has been watching this government and in particular watching this prime minister would doubt the energy, the commitment, the passion that all of us bring to our task," he said.
Asked if he would consider resigning if polling did not improve, Mr Abbott declined to answer the question.
"We will be a better government this year than last."
Meanwhile, the talkback caller who labelled Mr Abbott the "world's worst salesman" on Thursday says the prime minister should resign.
Melbourne-based transport sales manager and Liberal party member Andrew McNabb said he had gone to air on radio station 3AW because the prime minister was failing to heed the message from Liberal supporters.
"I've never heard Liberal voters complain about a prime minister so badly," Mr McNabb told Fairfax radio in a follow-up interview on Friday.
"Do the right thing - resign as prime minister. Think of the party, think of the country, not of yourself."
Mr McNabb suggested a leadership team of Julie Bishop and Malcolm Turnbull would be better.
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