Prime Minister Scott Morrison has warned Australia’s Triple-A credit rating is at risk under Labor’s changes to negative gearing and capital gains tax.

But Labor has blasted a report which claims their policy would result in fewer homes being built and less jobs in the residential building industry.

Shadow treasurer Chris Bowen has dismissed the economic modelling commissioned by Master Builders Association, saying Labor was not planning to end negative gearing.

‘This research does NOT model Labor’s reforms to negative gearing,’ he said.

‘Labor is not ‘ending negative gearing’ – it’s reforming it to ensure it works best for the economy and jobs by retaining it for new properties only.’

Labor has proposed limiting negative gearing tax breaks to new homes and a reduction in the capital gains tax discount.

The policy would also ‘grandfather’ negative gearing on existing property investments.

Mr Bowen said the association was warned after a meeting in June that their modelling had a flaw in it.

According to the modelling, up to 42,000 fewer homes would be built in all states and territories, with the loss of 32,000 full-time jobs.

Mr Morrison went hard on Labor’s policy following the release of the report

‘All those tradies out there, understand this – Labor’s policy to put up taxes on housing will cost jobs,’ Mr Morrison told reporters on Wednesday.

‘It will punish Australians. It will put our Triple A credit rating at risk – I know this for a fact as a former treasurer.’

Treasurer Josh Frydenberg said the research showed the ‘different market’ that would come about if Labor’s changes were implemented.

‘This modelling does show how punishing and destructive Labor’s changes to negative gearing will be,’ Mr Frydenberg told Sky News

Master Builders chief executive Denita Wawn said Labor’s policy ‘fails its own test’.

‘Australia cannot afford for housing supply, building activity and employment to go backwards.’

Ms Wawn also said there was no longer a need for the policy with a cooling property market and curtailed investor activity.