"We are frustrated," McNamara told reporters. "We started the game superbly and played with some great energy with the ball, but we gifted a lot of possession to the opposition and gave a lot of penalties away.
"We were sat there thinking and wondering what could have been and what maybe should have been if we had been a little bit cleaner in those areas.
"We know how good Australia are, and we knew we had to be at our best, or near our best, to win that game. We just fell a little bit short."
Next up for England is a match against Ireland in Huddersfield on November 2.
McNamara's men are still near-certainties to qualify for the quarter-finals because three teams will progress from Group A.
However, defeat to Australia means that England are likely to run into defending champions New Zealand in the semis.