The Coalition will make no changes to capital gains tax and negative gearing arrangements, as Prime Minister Malcolm Turnbull signalled an election campaign focused on property values and household wealth.
After weeks of suggesting the government might make some changes to negative gearing at the higher end of the income scale, Mr Turnbull said it was "common sense" to make no adjustments to existing arrangements.
"What Labor is proposing is a huge, reckless shock to the market. This is no fine tuning; this is a sledgehammer they are taking to the property market," Mr Turnbull said in Sydney on Sunday.
Earlier this year Treasurer Scott Morrison said there were "excesses" of negative gearing that the government was looking to curb such as the limit on the number of properties that could be negatively geared or on the dollar value that could be deducted.
Mr Turnbull faced opposition to any changes to negative gearing from within his own party room, including from former prime minister Tony Abbott.
Mr Turnbull's comments on Sunday confirmed that the Coalition wants to make property prices a key feature of the coming election campaign.
Labor's proposal would quarantine negative gearing to new housing investments from July 2017. It would also cut the capital gains tax discount from 50 per cent to 25 per cent.
Its policy is designed to make it easier for first-home buyers to enter the market and stimulate jobs growth by limiting negative gearing to new dwellings.
A big scare campaign
The opposition's treasury spokesman, Chris Bowen, accused Mr Turnbull of running "a big scare campaign, Tony-Abbott-style".
"Today, we saw Malcolm Turnbull tell the Australian people that he couldn't care less about the great Australian dream of owning your first home," Mr Bowen said.
"He thinks it's more important for an Australian buying their 10th or 11th property to get a tax break than it is for first-home buyers to get into the housing market."
He disputed the government's claims about what would happen to property prices under Labor's policy, saying it had "nothing but words and slogans and lies".
Mr Turnbull and Mr Morrison were asked several times at the announcement if the government had done any modelling to support its claims about Labor's policy.
Mr Morrison dismissed the questions, saying it was up to Labor to defend its policy because it was the party seeking to make changes.
The Housing Industry Association welcomed the government's announcement.
"Negative gearing promotes private investment in the residential property market, stimulates economic activity and relieves pressure off social housing and ultimately the public purse," the association's chief executive of industry and policy, Graham Wolfe, said.
"With an ageing workforce and mounting pressure on publicly funded services, retaining negative gearing will support the delivery of a larger stock of rental accommodation, increasing access to shelter, while promoting wealth creation and self-sufficiency in retirement for hundreds of thousands of mum-and-dad investors."
