Yes you are correct 1986 it was introduced. I think there may have been some retrospectivity back to 1984 related to property though?
Anyway the change you may be thinking of occurred in the in the late 90s or so under Howard to the situation now where you get a 50% discount in CGT payable if you hold an investment for 12 months or more? The thing with that change is it also removed the ability to index you cost base for CGT purposes by inflation, and in most cases you actually ended paying a bit more CGT believe it or not than under the old rules without the discount... (unless the capital gain is significantly higher than the aggregate inflation rate over the period the investment was held).
Negative gearing for property was also removed at one point in the mid/late 80s, but that proved to be a disaster (rents spiraled and there was a major actual housing crisis underway) and it was quickly re-introduced a year or 2 later. The government at the time forgot that the whole negative gearing thing was there to provide an incentive for private sector provision of what would otherwise have to be publically funded housing....
Cheers,
Beej