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Several billion dollars can't be pulled suddenly from one part of the economy without unintended consequences. Just ask the big miners or even Paul Keating from his attempt in the mid 80's. The consequences now may be a repeat of Paul Keating's experience or even a bursting of Australia's residential property bubble. No government is going to do that willingly.

You have to start somewhere and a cap is better than no cap as currently exists. If over time, rental yields appreciate relative to interest rates (in essence, real property prices decline), the cap could be progressively reduced and perhaps ultimately eliminated alltogether. This should be a policy objective. This approach is more likely to yield a more gradual decline of real property prices back to more realistic levels. 

Fundamentally, I am of the view that there should be no deductions against salary income whatsoever, but the road to that outcome is not a simple and short one.

At some point, Australia's residential property bubble may end up beyond the control of governments and burst anyway. This will impact positively on rental yields. This will be a more favourable environment to abolish negative gearing against salary income.