Tuqiri, who was a standout for Australia in the Tri-Nations series against New Zealand and South Africa, claims teams can physically match the Kiwis, but lack the confidence to beat them.
"They (the All Blacks) are a great team but a lot of their opponents are beaten before they get on the field," he said on the New South Wales Waratahs website.
"Playing against a team like the All Blacks, I think some guys are thinking, 'Oh, it's the All Blacks - I just don't know if we can beat these guys'."
The dual international, who is currently serving a lengthy suspension for a dangerous spear tackle on New Zealand skipper Richie McCaw during Australia's Tri-Nations clash with the All Blacks, said Australia was guilty of not having the mental edge to overcome its southern hemisphere neighbour.
"Sometimes if we get behind, we just don't have that mental edge to think we can win a game," said Tuqiri.
"We have the physical capabilities and can play above ourselves at different times, but being quite honest, I think we lack a bit of confidence when playing against the All Blacks.
"A lot of the northern hemisphere teams are certainly like that."
Tuqiri said the Wallabies need to be able to sharpen their mental resolve if they are going to be a contender for next year's World Cup in France.
"We do have to work on the mental approach," he stated. "It is probably underrated in our game and sport in general.
"I'd like to be part of a team where everyone from one to 22 says 'we can beat these guys - they are just in a jersey'."
The big Wallabies winger said he hoped Australia's four-Test tour of Europe this November was the catalyst for building that mental edge.
"Hopefully, this European tour will help us build that confidence within the team," he said. "Hopefully, we can go through undefeated.
"If we can win these Tests, it will give us a massive boost for next year. It will reinforce in us the belief that we have the squad to challenge for the World Cup."