"There is no question about that. This was a shocking lie. I'm not going to pretend it's anything else. But a fact that significant numbers of people believed it or at least believed it enough to change their vote, tells us that we have work to do and we are committed to that."

A source said this did not automatically mean the Coalition, if it formed government, would reverse the cuts it has made to Medicare, but Labor leader Bill Shorten said if Mr Turnbull were serious he would reverse the $2.4 billion freeze on the Medicare rebate paid to GPs and not proceed with $884 million in cuts to bulk-billing incentives for pathology and radiology. He also said the Coalition should match Labor's pledge to spend an extra $2 billion on hospitals over the next four years and dump plans to increase the co-payment for prescription drugs.

"When you do these four massive multibillion-dollar cuts to our health care system, you are undermining Medicare as we know it," he said.

With the Coalition sitting on 70 seats, Labor on 67, five crossbenchers and eight undecided, Mr Turnbull said he remained "quietly confident'' of being able to reach a 76-seat majority and avoid minority government.

How good are our politicians at listening and responding to what voters really want? Malcolm Turnbull and Barnaby Joyce speaking to the media in Sydney. Christopher Pearce

But with a hostile Senate looming, one senior source said it was accepted that the company tax plan was not going to pass the new Parliament.

None of the Senate parties support the whole 10-year company tax plan, which would reduce the rate for all companies to 25 per cent by 2026-27. Labor supports just a small tax cut for small businesses with turnovers of up to $2 million, the Greens support none of it, while Senator Nick Xenophon backs the first phase of the 10-year plan, which would grant those with annual turnovers of up to $10 million a rate of 27.5 per cent.

The source said that should the Coalition form government, either in its own right or as a minority government, it would have to compromise and legislate its plan "bit by bit", rather than in one hit as it had intended. This would most likely mean settling for a cut for small and medium businesses and trying for more next term if re-elected.


Another senior Liberal expressed fears over the cost to the budget of minority government due to the demands that would be made.

"Clearly there is disappointment with us and there will be a post mortem, but the country has a more fundamental problem," he said.

"They have served up a Parliament they expect us to make work.

"We've got the budget going south from here and now there are deals on top. It's a recipe for going sideways or backwards."

After two days of backbiting and recriminations, senior ministers lined up to back Mr Turnbull's leadership, if only because the worsening feud would jeopardise negotiations to form a minority government, especially in contrast to Labor's unity.

Mr Dutton, who some, but not all, conservatives want to make a run for the deputy leadership and replace Julie Bishop, said all that mattered at the moment was forming government.

"No one believes there should be change in leader," he said.

Treasurer Scott Morrison, who is also wearing blame for the campaign, stressed that the Coalition would have lost on Saturday had it not changed leaders in September.


"A year ago we were behind in the polls. Let's not forget that. And going into this campaign it was tight, it was 50-50 and that's ultimately where the result has ended up," he said.

Former prime minister John Howard, who had predicted a comfortable Turnbull win, called for calm between the warring conservatives and moderates.

"It hasn't been an outcome that we wanted, but it's not the end of the world and people shouldn't start slitting their throats, certainly not Liberals, and they should remember the character of their party," he said.

"The Liberal Party is a broad church, it's always been the custodian of two traditions of the conservative tradition and the small 'l' liberal tradition. And it always works well and works best when both of those traditions are respected."