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Coalition backbenchers nervous about changes to negative gearing -

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MARK COLVIN: Talk of tax system changes - against the background of falling opinion polls - has spooked a number of Federal Government backbenchers

They're warning the Prime Minister and the Treasurer not to make changes to the tax system that might undermine property values.

Malcolm Turnbull and Scott Morrison have attacked Labor's plans to wind back the tax breaks for Australians who invest in property.

But at the same time they've made it clear that the Government itself is considering changes to negative gearing.

Peta Donald reports from Canberra.

PETA DONALD: He let the debate run about a 15 per cent GST, leaving the Government vulnerable to a relentless campaign from Labor.

Now Malcolm Turnbull has tried to put it to an end - with his most definitive statement yet on the GST.

MALCOLM TURNBULL: I can assure you that the Government will not be taking a proposal to increase the GST to the election.

PETA DONALD: On the next big tax issue - the Opposition has been out first with its plan to only allow negative gearing on new properties, from mid next year.

BILL SHORTEN: We want to do something about reviving the Australian dream of home ownership, especially for younger people and single people.

PETA DONALD: Labor leader Bill Shorten says the messages from the Government on negative gearing have been confusing.

BILL SHORTEN: We will make hard decisions. I think by contrast in the last six months, all we have seen from Malcolm Turnbull's Liberals is division and an incompetent handling of the tax reform debate where different Turnbull ministers at different times during the day will say contradictory and different things.

PETA DONALD: The Treasurer has signalled a crackdown on what he's called "excessive" negative gearing.

Beyond that, the Government is focusing on attacking Labor's policy.

MALCOLM TURNBULL: Well I think - Look, let me say that there - negative gearing is a subject that is being debated at the moment. I can say that I think Labor's plan is a poor one.

PETA DONALD: The Prime Minister elaborated today, arguing Labor's plan would drive down property values.

MALCOLM TURNBULL: The value of a new property is obviously a function of what you can sell it for. And so if you say you can negative gear a new apartment, for example, but you can't negative gear that apartment at all, at any rate - it could be $10 of net interest loss - you can't negative gear that apartment when it is sold - that obviously reduces the number of people considerably who would be potential buyers of it.

PETA DONALD: As for what the Government should do on negative gearing, there's nervousness from some within its own ranks.

ACT Liberal senator Zed Seselja.

ZED SESELJA: I would say that we should proceed very, very cautiously with any alternatives. For this particular reason, Labor Party's policy I think will undermine confidence.

If we have a policy that starts to tinker with negative gearing, the potential is, even if it's a very sensible policy, even if it is only relatively minor changes, that that will affect confidence as well if both parties are taking that forward.

MICHAEL SUKKAR: For most people in my electorate, and indeed most middle-income Australians, their single biggest asset is their home.

PETA DONALD: Liberal MP Michael Sukkar's electorate is in Melbourne's outer east, where property values are a hot button political issue.

MICHAEL SUKKAR: We do need to tread carefully and luckily the Prime Minister and the Treasurer are doing just that. They are treading very, very carefully. We're consulting extraordinarily widely. We cannot afford to undermine the property market in this country.

PETA DONALD: Queensland Liberal MP Ewen Jones is another marginal seat holder who is urging caution. He wants any changes to be based on sound modelling to ensure rents down go up.

EWEN JONES: In a city like Townsville, we have a very high rental population, we’re a very transient city, and we’ve got army, air force and we've got university and hospital and teachers and all that sort of thing.

So we're a very transient population. Anything to do with negative gearing in my city is going to have an effect.

PETA DONALD: Treasurer Scott Morrison wasn’t giving any more clues about his plans today.

SCOTT MORRISON: You’ve got to make the right decision for the country, and a government shouldn’t be heckled or bullied into making decisions that it hasn’t done the full work on.

And what you’ll get from the Prime Minister and I as we work through these important decisions on tax, is we’ll do that work. We’ll do the homework and we’ll make sure it’s the right thing to do for the country.

PETA DONALD: Tomorrow he's due to address the National Press Club in Canberra.

The Treasurer could choose to elaborate or he could let this debate run too.

MARK COLVIN: Peta Donald.