Key elements of the Abbott government’s economic strategy have been thrown into chaos after Bill Shorten declared its first budget a document based on lies and committed the Labor opposition to combine with the Greens in the Senate to block them.

The move signals Labor’s intent to replicate the Abbott opposition style of no compromises in an approach that could force the government into grinding line-by-line negotiations in the Senate both now and beyond July when the new senators alter the balance of power.

Making his first post-budget address-in-reply speech as Opposition Leader, Mr Shorten rounded on Prime Minister Tony Abbott for breaking promises. He vowed  to block punitive changes to Newstart that would force some young unemployed people to exist without the dole, along with a shift in the pension age to 70, tightening of Family Tax Benefit Part B eligibility relating to children aged over six, and the move to restore twice yearly indexation to fuel excise.

The planned $7 per visit charge for seeing a  GP will also be blocked, with Mr Shorten slamming it as “ideological” and more akin to the hardline right-wing policies of the Tea Party in the US. However Mr Shorten declined to propose alternative savings.

In a hard-hitting speech emphasising what the opposition says were “wilful” lies told to the Australian people, Mr Shorten told Parliament Australians were both shocked and angry “at a prime minister who pretended he was on their side”.

He also challenged the government over suggestions it could go to a double dissolution election, saying: "If you want an election, try us. If you think Labor is too weak, try us."

Mr Shorten said the government had produced a “tax it or cut it budget” where people would pay more for medicines, GP visits and petrol, while if they were young and unemployed or relied on a pension, they would be left behind.

“On Tuesday, the Treasurer quoted from Robert Menzies’ “Forgotten People,” he said. “But the government forgot a lot people on budget night.”

“This is a budget of broken promises built on lies, and not just lies, systematic and wilful ones.”

Citing economic modelling conducted by the Canberra-based National Centre for Social and Economic Modelling (NATSEM), he said Labor could not pass measures that  would strip $1700 from the household budget of a family with an income of $65,000 and two children  in school.

“Add in health costs and the Prime Minister is cutting nearly $40 from their weekly budget,” he said.

But the opposition said the cuts would become harder as time goes on, citing  modelling which takes the 2014 household cost of budget decisions from $1733 to well over triple that by 2016 at $5830.

The unusually strong action on budget legislation represents a political risk for the opposition and could even push the government into seeking a fresh election – something Prime Minister Tony Abbott toyed with in an interview on Wednesday but stepped back from on Thursday, adopting a more conciliatory tone.

“I’m not going to be absolutely unreasonable. I’m going to be respectful towards the Parliament and the Senate,” he said.

Earlier in the day, politicians from all sides were out arguing their respective cases over the budget, which has divided opinion like few in recent years.

Treasurer Joe Hockey hit back at critics of the proposed $7 per visit GP payment, likening it to the daily costs met by smokers and drinkers.

‘‘Some people are screaming about a $7 co-payment,” he said. “One packet of cigarettes costs $22. That gives you three visits to the doctor. You can spend just over $3 on a middy of beer, so that’s two middies of beer to go to the doctor.

‘‘Let’s have some perspective about the cost of taking care of our health.

‘‘Is a parent really going to deny their sick child a visit to the doctor, which would be the equivalent payment of a couple of beers or one third of a packet of cigarettes?’’

That brought derision from the opposition with critics lining up to argue the Treasurer was out of touch if he thought $7 could buy two glasses of beer, and worse, that he had failed to understand the importance of $7 per visit to many low income families – especially with  multiple children.

Labor’s shadow treasurer Chris Bowen challenged Mr Hockey to a live debate at the National Press Club next Wednesday in a fiery question time.

Mr Hockey declined the invitation, declaring instead: “If I turned up at the National Press Club, it’d double the audience”.

On Friday, Mr Hockey told a breakfast event in Melbourne that Mr Shorten's reply to the budget resembled someone standing over the twisted metal of a train crash and saying, "there's no problem here".

"His solution is no solution. It's just a political response, not a policy response," he said.

"I don't think Australians will take him terribly seriously. I'm not going to waste my time responding to him."

The government now faces stiff opposition from all sides  with states and territories angry over projected cuts to schools and hospitals worth $80 billion over 10 years, and seemingly no support for its measures from anywhere in the Parliament. That has increased the prospect of an early election, although that remains an unlikely outcome at this stage.

Palmer United Party leader Clive Palmer tweeted on Friday morning that if Mr Abbott called a double dissolution election he would run candidates in all lower house seats and stand for prime minister.

Social Services Minister Kevin Andrews said on Friday that it was the Labor opposition that was in denial in response to a question that the basklash over Mr Hockey's budget indicated many measures were too high.

He shifted the blame to Labor and repeated the government's view that the country's finances were in a mess.

"Frankly, Mr Shorten is in total denial," Mr Andrews said.

"Elisabeth Kubler-Ross described denial as the first stage of grief and that is where Mr Shorten obviously is.

"He offered no solution last night to paying down Labor’s record debt."

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