Anthony Albanese seemed to have taken the first point on board when he spoke to Insiders on Sunday.

Rather than promising flat out not to change the rules surrounding negative gearing, he merely said he was "supportive of the current rules, we have not considered changes to them".

But he was less careful when it came to the virtues of negative gearing. He said there was "a whole lot of analysis that says they encourage investment in housing, the key when it comes to housing is housing supply."

His official advisers in the Treasury don't think negative gearing does much to increase the supply of supply of housing; or if they do, they've omitted it from the six-page briefing note headed "negative gearing" prepared to help the treasurer answer questions about it in Parliament.

Negative gearing is a particularly Australian tax benefit extended to dud landlords - those who can't make money by renting out properties.

If they lose money (by paying out more in interest, maintenance and other expenses than they are receiving in rent) we let them offset that loss, not only against income from other investments, but also against income from their wage or salary.

It means they can cut their wage for tax purposes, cutting the tax they pay on it, all the time hanging on to a property they can later sell for a profit that will be taxed at only half their normal rate, thanks to Australia's 50 per cent discount on capital gains.

It isn't allowed in the United Kingdom or the United States. There, if you are a landlord who can't make money you can offset your losses against profits from other investments, but not against your wage.

In Canada you can offset rental losses against wages, but there must have been an "an intention to make a profit", which would probably rule out most Australian negative gearers.

In Australia, an astounding 1 million of us negatively gear - more than one in nine taxpayers. In 2020-21 they claimed losses amounting to $8.7 billion - 3.5 per cent of the income tax collected - meaning that if they didn't do it (if they didn't claim for what seem to be deliberate losses) the rest of us could pay less tax.

What Albanese said on the weekend was half right. Negative gearing encourages investment. Most months more than one in three new home loans is for an investment property.

But most of those loans don't increase supply - the thing Albanese says matters.

That's because the overwhelming bulk of investor home loans go to "investors" planning to buy existing homes - to planning to bid against would-be owner-occupiers and succeed.

In December only 23 per cent of the loans to investors was used to build a home or buy a newly built home. In November only 19 per cent.

As a means of getting more homes built, negative gearing leaks like a sieve. As a means of ensuring Australians continue to rent rather than buy, it's effective.

In the 20 or so years since the headline rate of capital gains tax was halved, supercharging negative gearing, the proportion of Australian households renting has climbed from 26 per cent to 30 per cent. If those extra renters become owners, an extra 400,000 Australians would be in homes they could call their own.

The really bizarre thing is that Albanese has it in his power to ensure negative gearing does exactly what he said it did - supercharge the building of houses.

All Albo would need to do is what Labor promised to do in 2016 and again in 2019. In those elections, Bill Shorten went to voters promising to limit the use of negative gearing to newly built homes.

As Shorten put it, taxpayers would "continue to be able to deduct net rental losses against their wage income, providing the losses come from newly constructed housing".

MORE PETER MARTIN:

The sieve would no longer leak. Every dollar of tax lost to a negative gearer would help build a home.

What would have happened if Shorten had got his way and Australia both focused the use of negative gearing and cut the capital gains discount as he had proposed?

Modelling just published in Australian Economic Papers finds the share of households who own their home rather than renting it would have climbed 4.7 per cent.

That's security worth having, especially if it is accompanied by more homes.

Australia's Treasury has begun publishing estimates of the cost of the present unfocused system of negative gearing. Its latest, released last week, puts the cost at $2.7 billion per year, to which should probably be added a chunk of the $19 billion per year lost as a result of the capital gains concession.

The estimates are new. Until Jim Chalmers became Treasurer, his department didn't publish estimates of the cost of rental deductions.

Chalmers is far from the first treasurer to be curious about what the concession does. Scott Morrison expressed concern about the "excesses" of negative gearing.

And Morrison's predecessor, Joe Hockey, said on leaving Parliament that negative gearing should be skewed towards new housing so "there is an incentive to add to the housing stock rather than an incentive to speculate on existing property".

Albanese probably knows what he should do, but he is cautious, until he is not.