Negative Gearing, page-29

I'm going to give you the answer to your dilemma, the removal of negative gearing will pass burden to the renter in high demand suburbs. So that wont make housing more affordable.

Negative gearing is used to offset income tax for people who can afford to diminish their income for the benefit.

So, logic should tell you that the issue is linked to income tax rates of those that can afford rental properties. If income tax rates for those investors where lower the offsetting of losses wouldn't have such a potent effect and would be less inciting.
Increasing housing supply IS the issue. That is caused by local councils restricting the supply of land not negative gearing.