"I personally think Test cricket is very healthy and is headed in the right direction. There have always been weak teams in the history of Test cricket. The New Zealanders took 26 years before recording a victory and I think it is better the two-tier system is introduced in the One-day cricket first," Waugh said while launching three new products for AMP Sanmar in Mumbai.
"According to me if there is any weakness in the present system it is the increasing number of flat wickets the players have to encounter and something has to be done about it. The governing authorities (International Cricket Council) have to keep an eye on it (flat pitches)," he added.
Terming West Indies skipper Brain Lara's record breaking innings (400 not out) recently as a "fantastic performance", Waugh compared it to the first sub four minute mile run by Roger Banister 50 years ago.
"Lara's knock was full of concentration and skill and it was truly a fantastic knock," he added.
About Sri Lankan off-spinner Muttiah Muralitharan's suspect bowling action, Waugh said, "it is up to the governing council to look into the matter. Personally, I think he is a better bowler when he is not bowling the 'doosra' and he should concentrate on bowling off spinners.
"His world record of Test victims is a fantastic performance and he is a very nice guy," the ex-skipper added.
Commenting on his successor Ricky Ponting's wish to win the forthcoming four-match Test series in India in September on behalf of his former skipper, Waugh said, "it is nice of Ricky Ponting to say that he wants to win the series for me".
"I think they should concentrate more on playing good cricket instead of winning the series. If you play good cricket the win is bound to follow and I would love to see them win," he added.
Waugh agreed that the gap between the top two teams in Test cricket was narrowing.
"I am not sure which team is number two. India played very well to square the series in Australia and then went on to beat Pakistan while Pakistanis are very unpredictable. I can say that the gap is certainly narrowing but still the Australians are a bit ahead," he added.
Waugh denied that he ever called the Australians' failure to win a Test series on Indian soil as 'last frontier'. "It was all made up by the media and I never said anything like that. All I said was it was ridiculously a long gap (11 years from 1986 to 1997) for us to win the series in India".
Terming his team's Test defeat in 2001 in India as "unfortunate", Waugh said, "it was unfortunate that we could not win the Test series in the India but we have played some good cricket by winning the World Cup in 2003 and playing a great series at home after that".
On the recommended changes to the One-day cricket rules by the ICC cricket committee-playing, headed by Sunil Gavaskar, Waugh said, "we have been trying various experiments in Australia and they have been well received by all".