Penney has said 'rebuilding' the side that has lost more than 700 caps of experience would not be an excuse. Gone are: Bernard Foley, Sekope Kepu, Nick Phipps, Tolu Latu, Curtis Rona and Will Miller.
The Waratahs would see making the playoffs as a realistic proposition. Thinking otherwise would be admitting failure before the season even began, he said.
"You've got to go in believing. If you don't have hope, then it's hopeless," he told Sydney media.
With several Junior Wallabies on tap, Penney believed there was still enough experience available for the side.
"I'd like to think there is enough [experience] there and enough talent within the youth that the combination of that is going to be a very exciting mix," he said.
While the team had not yet sat down to put together their vision and values statement they would have a plan in place ahead of the season.
"There will be some expectations that we will deal with over the next couple of months together, to put a vision and values piece together, and winning will be part of that," he said.
Penney, who has only started working with the side, said his initial impression was of the talent in the group.
"There's a massive degree of excitement around what the future can look like which is great and there's a nice blend in the age profiles. There's some youthful exuberance and some maturity that gives it a lovely balance.
"It's very early doors but very, very positive about what the potential is," he said.
Penney said he was looking forward to working with fellow Kiwi Dave Rennie who has been appointed Wallabies coach.
"I would have known David for a long time. Hopefully it will be a really positive relationship.
"I am sure he will have the same views coming in that I do. We are trying to do the best thing by players and by Australian rugby, and he is a quality bloke and a quality coach and I am looking forward to finding out his vision for what the top team is going to look like, and how we can support that.
"If we can support each other, it will strengthen us both," he said.
If they were able to achieve that then the next World Cup could be an exciting time for Australian rugby, he said.