An asset is negatively geared when interest payments on borrowings used to finance the asset exceed the income it generates. "Negative gearing" means that these losses can then be used to offset other forms of income such as wages. Although it is most commonly used in the property market, negative gearing can apply to any form of asset. 

Australia is not the only country to allow negative gearing. Germany, Japan, Canada and Norway all have very similar systems to ours, with rental losses able to offset total income tax payable and unused losses able to be carried forward to offset future tax liabilities.

Other countries have similar systems, albeit slightly less generous, where rental losses can generally be used to offset future rental income but not other forms of income (e.g. wages income). Some countries do not allow negative gearing but nevertheless have some allowance for rental expenses to reduce overall tax liability.   

Negative gearing needs to be considered in the context of the broader tax system, especially personal income tax and capital gains tax.

It is not accurate to focus on only one aspect of our tax system without considering the whole system. For example, relative to other OECD economies, Australia has a high marginal tax rate which kicks in at a low-income threshold. When considering the tax system in aggregate, Australia is one of the most heavily taxed countries in the OECD.

In summary:

Negative gearing (where rental losses can be used to reduce tax on other forms of income) is not unique to Australia. Germany, Japan, Canada and Norway all have very similar systems to ours.

A number of other countries have limited versions of negative gearing, generally with restrictions on deductibility of rental income and limitations on the extent to which losses can offset future income. 

Negative gearing has to be viewed in the context of the broader tax system, especially personal income tax and capital gains tax.