Tony Abbott is standing by his treasurer, saying Joe Hockey is just trying his best to do the right thing by Australians and keep the economy on track.
The prime minister disagreed with suggestions Mr Hockey had made another gaffe with his advice to would-be first home buyers that they just needed "a good job that pays good money".
Mr Hockey's "outstandingly" good budget had been the best possible thing he could have done for home buyers because it had lifted confidence, he told told reporters in western Sydney on Wednesday.
The federal treasurer sparked a wave of criticism when he told Australians wanting to buy a house to get "a good job that pays good money".
"Let's not play the man, let's actually deal with the policy," Mr Hockey told ABC radio on Wednesday, adding he understood the depth of feeling over his comments.
"That's why we are working so hard ... to build the jobs, to build the opportunities for people to get ahead."
Mr Hockey acknowledged that for a lot of Australians in Sydney, Melbourne and some other parts of the country housing was very expensive.
"I totally understand that," he said.
The treasurer maintains increasing the supply of housing will address the issue.
"We are going to work with the states to try and increase the amount of supply in the marketplace," he said.
Families under housing stress: Morrison
Social Services Minister Scott Morrison admits some Australians paying off their homes are under financial stress.
Mr Morrison told reporters in Melbourne on Wednesday that while renters were paying on average about 25 per cent of their
disposable income on accommodation, those paying mortgages were forking out about 31.5 per cent.
"Once you get above 30 per cent, there is a bit of stress related to that," he said.
'Brain snap'
Opposition Leader Bill Shorten labelled Mr Hockey's comments a "brain snap".
"Every time Joe Hockey opens his mouth, we get an explanation of how out of touch the government is," he told reporters in Hobart.
"The test is does Tony Abbott agree with Joe Hockey or does he agree with the outrage of Australian families who want to enter the housing market or want to see their kids be able to afford to have a house in the future."
Mr Shorten said part of the problem lay with improving the supply of land and the availability of new housing construction.
Discussion was also needed on the demand side, he said.
Labor's finance spokesman Tony Burke said the treasurer was having "crazy rants" day after day without any factual basis.
He also said there were many policy levers that could help improve affordability because housing prices were influenced by demand as well as supply.
The opposition is open to including changes to negative gearing in any discussion.
"We've ruled out anything that would be retrospective and flatly ruled out anything that would have a negative impact on supply," Mr Burke said.
Liberal MP backs Hockey's housing advice
Liberal MP Craig Laundy has come out to back the treasurer over his widely criticised advice to first home buyers.
"He was saying that if you have a job and that job is secure and that job is well paid, a bank will lend you money and interest rates are as low historically as they have been," Mr Laundy, whose electorate covers parts of western Sydney, told ABC radio on Wednesday.
Mr Laundy later said Mr Hockey's job was not on the line after his comments.
"Pulling a sentence out of a paragraph I don't think, in this 24-hour, this gotcha media cycle, is fair," he told ABC radio.
The backbench MP claimed the federal government was being asked to provide a "silver bullet" to fix housing affordability, but there isn't one.
Parliamentary secretary to the treasurer Kelly O'Dwyer says the nation is under-supplied by about 200,000 homes a year.
"We know that this is a very real issue for so many families ... but the states need to get on board, release more land so more people can afford to own their own home," she said.
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