At a meeting of state and federal treasurers on Friday, Scott Morrison said reducing negative gearing incentives would mean fewer rental properties and higher rents.
He also released a report, Innovative Financing Models to Improve the Supply of Affordable Housing, which examines new ways to attract more private investment into affordable rental housing.
“The government isn’t revisiting its position on negative gearing," said Morrison.
He said it is "the mum and dad investors who actually provide the capital for the nation’s rental housing stock, if we were to withdraw that, then that has the only outcome of increasing rents.”
Morrison said higher rents will have the strongest impact on those on the “lowest of incomes”.
The negative gearing debate reignited last week when NSW planning minister Rob Stokes said changes to the tax break should be considered as a reform to improve housing affordability. The NSW premier Mike Baird agreed with his minister, though said he had not seen the government's modellling about how the rental market could be impacted.
Shadow treasurer Chris Bowen said the government's stance stands in the way of ordinary Australians trying to buy their own home.
“Malcolm Turnbull and Scott Morrison are oblivious of the housing affordability crisis that threatens to see a generation of Australian young people locked out of the housing market,” he said.
Bowen says the treasurer is “more concerned at defending tax concessions for investors … than he is for a renter or young family saving for their first home.”
The government is looking at new ways, outlined in a report, to attract more private sector investment into affordable rental housing for Australians on low incomes. At Friday's meeting, all recommendations in the report were accepted.