Meanwhile injury-hit New Zealand won the opening round of the HSBC World Rugby Sevens Series, defeating the U.S. 21-5 in the Dubai Sevens final.
New Zealand won the Dubai Sevens rugby title a record-tying sixth time after beating first-time finalist the United States 21-5 on Saturday.
A top-four finish in the overall standings this season means automatic qualification for the 2020 Olympics.
New Zealand won their first game at the Sevens Stadiums in Dubai easily, beating Kenya 34-7. The Aussies had it at 10-10 before Bianca Farella brought victory to Canada with a try with only seconds remaining on the clock.
Utility forward Biselele Tshamala, who plays for College Rovers in Durban, South Africa also enjoyed a good tournament with three tries while there were also solid performances from Australia-based Connor Pritchard and Takudzwa Kumadiro, who plays for local side Old Georgians.
The Canadian men were ninth a year ago.
"We're not quite there yet, that's the reality of it", Walsh said.
Australia's women are in action next in Sydney from February 1-3 where they will be bolstered by the return of stars Emilee Cherry, Shannon Parry and Emma Tonegato. That will be followed by the Japan Sevens from April 20-21 in Kitakyushu, Canada Sevens from May 11-12 at Westhills Stadium and Paris Sevens from June 7-9.
The two-time winners broke back through Dominique Du Toit, but Ellie Kildunne and Natasha Hunt both went over the whitewash to seal a flawless start to the event in Dubai.
"Blue-yellows" lost to vallican with the score 14:19.
The USA then edged a thrilling game against Australia 22-17, with Danny Barrett crossing more than two minutes after the hooter when the scores had been tied up. Canada is captained by former University of Victoria Vikes great Nathan Hirayama.
The next stop in the Sevens Series takes place in Cape Town, South Africa, next weekend.
Australia started their tournament with a 12-26 loss to England after two late tries but were able to draw back a win in their second match against China.