It has been a tough first season for the Rebels, who have conceded more tries than any other team and have only won three games - Brumbies, Hurricanes and the Force.
"In all instances this side is competitive, save one. We have a serious issue in defence and it's killing us," admitted Macqueen this week.
"We've learned the lesson and we'll be moving to rectify the problem in the off-season."
Hill, who took Sydney University to five successive first grade premierships, was brought in to learnt he ropes under 1999 World Cup winning coach Macqueen when the Rebels became the 15th Super Rugby franchise two seasons ago.
Macqueen offered the credibility and experience the Rebels needed to step into Super Rugby and it is understood he was only prepared to take the job on for two years.