Rae says despite a lacklustre showing in some recent polls, the Liberal Party's underlying approach is stronger than the NDP's.
A couple of recent polls put the Liberals in third place, well back of the NDP and governing Conservatives.
"I think there is obviously going to be a certain honeymoon effect for Mr. Mulcair and the NDP after their convention. That's perfectly natural," Rae told reporters at the Nova Scotia Liberal Party's annual general meeting in Halifax on Saturday.
"It just... shows that we have a lot of work to do."
Rae also reiterated that broadening the Liberal membership base and boosting financial contributions will be paramount in rebuilding the shattered party.
"We've got work to do as a party in putting the meat on the bones of our policies, and that's something that obviously is going to need to happen over the next year."
The Liberals lost one seat in Nova Scotia in the 2011 election when New Democrat Robert Chisholm beat out incumbent Mike Savage in Dartmouth-Cole Harbour, a riding he had held since 2004. The Grits hold four of 11 Nova Scotia seats in the House of Commons.
Rae remains cagey on his ambitions on becoming permanent leader, only saying he will not be making any decisions until the rules for the leadership contest are set.
Rae tried to rally Nova Scotia Liberals with a blistering attack on the governing Tories.
He accused the Harper government of being unethical, using International Co-operation Minister Bev Oda's spending scandal as an example.
Last week, Oda agreed to repay almost $3,000 she charged taxpayers for limousine service while staying at a posh hotel in London. Oda also upgraded from a five-star hotel to the even more swanky Savoy while at the conference on international immunizations.
"The cost of one glass of orange juice in this very nice hotel - $16. The cost of taking her from the (Savoy Hotel) to the other hotel - $1000. But the experience for Bev - priceless," Rae told members, evoking a roar of laughter.
Rae slammed the government for deeming that Oda followed the appropriate guidelines when hiring the limousine.
"This is why I say that this is a government that is ethically challenged."
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