This has been edited from an article in the Sydney Morning Herald
Scott Morrison says changing concession will drive up rents, make it harder to save for house deposit
Some Coalition MPs say debate is needed, policy could be changed
Negative gearing debate comes amid concerns about Sydney housing affordability
Some Coalition backbenchers are backing Labor's demand to curb the tax break in order to control the growth of house prices in capital cities.
But speaking in London, Mr Morrison said the policy would not work and again reinforced the Government's position that changing negative gearing would make it harder to save for a house.
"The changes that Labor are proposing to negative gearing drive up rents," he said.
"Now if you're renting a house you're also trying to buy a house, so you don't make it easier to buy houses by jacking up the rents."
The Member for Canning, Andrew Hastie, was quoted in The Australian yesterday as saying housing affordability was a "moral issue" and that "everything should be on the table".
Another Liberal MP, John Alexander, told the newspaper there needed to be a debate on the issue, labelling negative gearing an example of politics "[getting] in the way of developing better policy".
Labor's stance on negative gearing 'jingoistic'
Mr Morrison's remarks come almost one week after Sydney's housing affordability crisis was highlighted in an international survey, which ranked the Harbour City's house prices behind only Hong Kong among other world cities including London and New York.
Negative gearing and capital gains tax
Labor wants to rein in negative gearing along with the capital gains tax discount, while the Government is not touching either — but what are they and who uses them?
New NSW Premier Gladys Berejiklian used her first press conference to highlight housing affordability as one of her top three priorities.
Negative gearing is a key policy difference in Canberra, with the Turnbull Government ruling out changes to the investment-property tax break, despite calls from the NSW Liberal Government to ease housing affordability.
The Labor Party has advocated for negative gearing reform, however Mr Morrison described their debate on the issue as a "cruel hoax".
"I think what Labor has done on negative gearing has become very jingoistic when it comes to housing affordability policy," he said.
"They believe in silver bullets. It is foolish and reckless and doesn't help anybody. "The way that Bill Shorten and, indeed, Chris Bowen and the others, have engaged in address Australian's frustration at the moment with the politics of populism and denial is a cruel hoax."
Attracting private investment into social housing
Meanwhile, the Federal Government is investigating different funding models to improve the supply of social and low-cost housing.
Mr Morrison has released a discussion paper on social impact investments which provide a financial return to investors in exchange for saving the Government money.
The Treasurer said state and federal Governments spend a combined $10 billion on housing each year but demand still outstrips supply.
He said the existing system is not working and the Government is keen to see whether private sector investment could help increase housing stocks.
"Here [in the UK] you've got institutional investors, you've even got Australian superannuation funds investing in affordable housing in the UK, we need to ensure we have an environment where they'll do the same thing in Australia," he said.