PM leaves door open to negative gearing changes, saying he ...

Prime Minister Anthony Albanese has left the door open to Labor revisiting changes to negative gearing.

Mr Albanese was asked to respond to reports in Nine newspapers that the government had commissioned Treasury modelling on possible changes to the tax arrangements for investment properties.

Labor took such a policy to the 2019 federal election, which it lost, and the prime minister hosed down the prospect of revisiting the idea as recently as last week, when he scoffed at questions on the subject in an ABC interview.

In a press conference on Wednesday morning, Mr Albanese said the government "valued" Treasury's advice and he was comfortable with it considering a range of issues.

"Treasury, I'm sure, like other departments, do a range of proposals, policy ideas. I want a public service that is full of ideas," he said.

He refused to rule out changes to negative gearing, instead pointing to existing housing policies focused on increasing supply.

"What our government is considering is fixing housing supply by getting our legislation through the Senate, that's what we're considering."

Coalition finance spokesperson Jane Hume said the Coalition would oppose any negative gearing change that would "reduce supply [and] push up rents," something she argued would result from a significant winding back of the tax concession.

Jane Hume warned negative gearing changes could restrict rental supply and said the Coalition would likely oppose them. (ABC News: Matt Roberts)

"When you remove those tax incentives… investors leave the system so that we have fewer rental properties. And those that stay in the system push their rents up so that they can compensate for the loss of that tax incentive," she told the ABC's News Breakfast on Wednesday.

"There's nothing wrong with the government considering anything. But lying to the Australian people about whether they're considering it is another issue entirely."

A spokesperson for Treasurer Jim Chalmers said the government's housing policy was "clear" and "doesn't include that change".

A government source emphasised that the government was not proposing a change, but that Treasury considering various policy issues would not be unusual.

"We have a broad and ambitious housing agenda and we could be building more homes if it wasn't for the divisive politics of the Greens and Coalition," the spokesperson said.

Two of the government's housing policies are currently stuck in the Senate without the support of either the Greens or the Coalition.

One is a tax incentive to encourage private developers to build apartment complexes with some rent-capped properties. Another is a subsidy scheme for first-home buyers.

The Greens have issued several housing-related demands in exchange for their support on those bills, including calling for negative gearing and capital gains tax changes.

Negative gearing is shorthand for the feature of Australia's income tax system that allows property investors to deduct losses made on their investments.

It means, if a property investor pays more in mortgage interest than they make from their tenants, for example, they can reduce the tax they pay not just on the property, but overall.

A "negatively geared" property is one set up to make a loss in this way.

If the price of the house goes up over time, the owner can make that money back and profit upon the sale of their property because there is a 50 per cent discount applied to capital gains tax (CGT) on property.

The combination of negative gearing and the CGT discount "cost" the budget tens of billions of dollars a year and economists and both sides of politics have previously contemplated changes.

Labor's 2019 policy was to restrict negative gearing to newly-constructed houses only, and to exempt all pre-existing negatively geared properties.

Another option floated, including by the Greens, is to limit the number of properties an individual investor can negatively gear.

A large proportion of those who negatively gear have only one property – a group sometimes referred to as "mum and dad investors" – but a significant proportion of the properties that are negatively geared are owned by a smaller group of investors with large property portfolios.

The Greens have framed negative gearing changes as a measure to address the housing crisis, although analysis by the Grattan Institute has previously found that the effect on house prices of any change that exempted current negatively-geared properties would be small.

In an interview on ABC Radio Melbourne, Labor backbencher Sam Rae said negative gearing was "an important conversation," but said it should be treated as a tax issue rather than a housing issue.

""Let's be very, very clear that [negative gearing] is about taxation. If we want to deal with the housing challenges our community faces, there's only one answer, and it is increasing the number of houses, and that is what our policy focuses on."