Malcolm Turnbull is confident the coalition can form majority government despite losing a swag of seats in Saturday's election.
With the result unclear at 12.30am AEST on Sunday, a surprisingly upbeat prime minister rallied the party faithful in Sydney.
"Based on the advice I have from the party officials, we can have every confidence that we will form a coalition majority government in the next parliament," he said.
Mr Turnbull conceded it was a "very, very close count" with 30 per cent of votes yet to be counted.
It could be several days before the results were finalised, with official counting not expected to resume until Tuesday.
The coalition had been up against some of the "most systematic, well-funded lies ever peddled in Australia" with Labor and the union movement spending millions of dollars feeding its Medicare scare campaign to vulnerable Australians.
Police would "no doubt" investigate text messages sent to thousands of Australians on election day purporting to be from Medicare and warning of its privatisation by the Liberal Party.
"This is the scale of the challenge we faced and regrettably more than a few people were misled."
Mr Turnbull accused Labor of boasting about how skilfully it had lied on Medicare, describing it as a "shameful episode in Australian political history".
Attorney-General George Brandis confirmed the Liberal party had referred the matter to police.
Mr Turnbull also declared Labor had "no capacity" to form a stable majority government.
The coalition would press ahead with its economic plan because the alternative was for Australia to fall out of the line-up of world leading nations.
"The alternative is hiding under the doona and pretending the world is not what it is," he said in Sydney.
"It's a form of political escapism that you can only continue for as long as you can keep on running up more and more debt."
Mr Turnbull hit back at criticism his decision to call a double-dissolution election was a political tactic.
It wasn't designed to remove crossbench senators but to restore the rule of law to the construction industry.
"Those that say we shouldn't have called a double-dissolution election are saying we should have just let the CFMEU get on with doing what they like and never challenge them."
"That is not in Australia's interests. It's weak."
