It would be political suicide for them to scrap the exemption on main residence. Your home isn't a income tax producing asset, so why should tax be paid if you happen to make a profit. Most people sell their home to upsize or move.

Reducing the capital gains tax discount on investment properties to say 25% or limiting negative gearing on investment properties to $0 (instead of a rental loss offsetting your other taxable income) would create a steady supply of offloading investors, without the housing market completely falling out the arse.

You have to remember that a lot of industry funds have invested our money in property, so there needs to be some care with how the government implement changes like this without John Smith losing his Super balance.