Australia have endured mixed results in the 50-over format over the past 15 months - with a 4-0 defeat in England last July coming after they were held to a 2-2 draw by the West Indies in March. They then drew their recent home series against Sri Lanka 2-2, but responded to thump the West Indies 5-0.
"I think we've had enough wake-up calls over the last 12-15 months to realise we're not a powerhouse in one-day cricket anymore," Bailey said. "I still think we can be the best side in the world in one-day cricket but it's certainly not by the margin that it was two, three, four years ago."
The Australia squad for their defence of the ICC Champions Trophy, which begins on June 6 in England, has now been announced, and Bailey says they are under no illusions about the work they have to do to regain their once-lofty standing.
He added: "I guess the recurring theme for us over the last few months and the last few series has been the gap between our best and our worst cricket.
"For us to consider ourselves a really strong one-day side again, that gap's got to really close up.
"I think that'll be the main motivation - to make sure we can just be playing as good a cricket, as strong a cricket, as we can each time we step on the park.
"It is a big tournament. I know we've won it twice. It's certainly a big goal for us, and a point to prove that we're back on track with our one-day cricket to see if we can win it a third time."
Western Australians Nathan Coulter-Nile and Mitchell Marsh were the only new faces in the Champions Trophy squad as selectors named an experienced 15-man squad.
Bailey admitted he is excited by the inclusion of 21-year-old Marsh, saying: "How hard he hits the ball is phenomenal. I don't think there's many people in the world hit the ball as hard as he does."
- Sports & Recreation