The defending champions were stunned in their opening Group B fixture, going down 1-0 to Jordan, who subsequently secured qualification to the last 16 with a 2-0 win over Syria on Thursday.
Victory for the Socceroos at Rashid Stadium would propel the holders from bottom into second place in the table and leave progression to the knockout stages in their own hands.
Palestine secured their first ever point in the Asian Cup thanks to a 0-0 draw with Syria, and Arnold is demanding that his players match their opponents' work ethic and hopes their added quality proves decisive.
"This next game we've got to come out and fight," Arnold said. "The first part of it in a football match is the football quality where we've got the edge...but it's about the fight as well.
"We've got to show the same desire. Match that fight and then we'll win the football game. I've seen the hurt after the game and I've seen the motivation. They're on the edge, they're ready to go. I expect a reaction.
"There were a lot of good things in the Jordan game. Obviously they parked the bus and made it hard for us but there was a lot of good stuff that we showed the boys.
"If something doesn't go to plan, I've always been someone that's been very positive...it's my job to pick them up straight away and I've done that. I've picked them up.
"I don't yell, I don't shout. I may seem like I'm a person like that but I'm not. I'm completely opposite and I'm going to keep them happy. These things happen in football."
Arnold seems set to be able to call on Tom Rogic, who broke his hand against Jordan, while striker Andrew Nabbout (groin) missed that match and is working his way back. Right-back Josh Risdon was substituted at half-time and will be given as much time as possible to prove his fitness.
PLAYERS TO WATCH
Palestine - Rami Hamada
The goalkeeper delivered Palestine's first clean sheet in the history of the competition last time out, and his team-mates - who failed to muster a shot on target against Syria - may need him to be at his best if they are to gain anything from this encounter.
Australia - Tom Rogic
Despite nursing his hand injury, Rogic has taken a full part in training in the build-up to this clash and the Socceroos will look to the Celtic man as their primary creative influence after drawing a frustrating blank against Jordan.
KEY OPTA FACTS
- Palestine's 0-0 draw against Syria in their 2019 Asian Cup opener was their first ever point in the competition, having lost their previous three games.
- No reigning champions have ever lost their first two games at an Asian Cup tournament.
- Palestine have scored just one goal in their first four Asian Cup games, with the nation failing to record one shot on target in their 2019 opening contest against Syria.
- Australia have never failed to score in successive Asian Cup games.