"Ask the first person you meet on the street about that nation's situation, and he will use one word to say 'bad' and two words to say 'very bad'. This is important, and we can't disregard this. This is the collective feeling derived from the public's lack of faith in its elected figures," she added.
Speaking at the start of a seminar in memory of Major-General Aharon Yariv, who served as head of Israeli military intelligence during the 1967 Six-Day War, Livni said that "There is no doubt the public has lost its faith in politics, and we have earned this honestly and dishonestly."
The foreign minister warned that "from here the way to undermining the foundations of democracy and to anarchy is very short, and this is why we must return something that has gone astray along the way."
"This year we celebrated 60 years. There were celebrations, we enjoyed the fireworks, the yes and no of the State's declaration, Ben-Gurion's speech. I'm proud of Israel's achievements as far as the economy and the high-tech industries are concerned, but the people in the street think we're not doing so well."
She added that "what was obvious in 1948 is not so obvious today. This isn't necessarily our fault, but rather happened because of difference processes and due to the lack of governmental stability.
"It is important to maintain the governmental stability. I have served as minister in the Israeli government since 2001, and I supervised six different ministries."
'Palestinian state is the solution for refugees'
Due to the lack of faith in the governmental system, Livni claimed, the public is losing its faith in additional systems.
"It is enough to have one crooked leg for the entire democracy to be crooked. The first thing a politician must do when he is elected is restore the public's faith. The elected official is required to become familiar with the office, talk to the workers, seek to create reforms if he believes change is needed, and negotiate the budget with the Treasury, because this is the stage necessary for a reform.
"The reform remains a newspaper headline. The minister's successor usually does not want to implement his predecessor's reforms, because he won't be credited for it."
The foreign minister explained that Israel's definition as a Jewish state is something the international community finds hard to accept.
"A Palestinian state is the solution for all Palestinian refugees. Israel is not an option for them," she said. "All Israelis are equal right citizens and the government must uphold this equality; but past governments haven’t always been able to do that… An end to the conflict also means that Israeli Arabs must accept Israel's existence at the Jewish homeland."