"Negative gearing" simply means borrowing money to invest in an asset where the amount of interest you pay on the loan exceeds income from dividends or rent.

The shortfall can then usually be claimed as a tax deduction against other income.

The idea is that while you are making an income loss, your portfolio has capital growth which exceeds the amount lost.  You won't pay capital gains tax on the gain until you sell the asset (which could be many years later, or never), but in the mean time have gotten tax benefits from the income deductions.

Negative gearing can be very tax efficient because the maximum rate of tax you'll pay on a capital gain (paid to a person) is half your marginal tax rate, whereas the deductions claimed were deducted at your full marginal tax rate.

There is nothing special or magical about negative gearing, despite the aura given to it at some wealth creation seminars.  Ideally you should be positive gearing, i.e. making more income from the investment than you are paying on the loan.  Turning a positively geared portfolio into a negatively geared one is simple enough, you just reduce the amount of income you get (by cutting the rent on your property for instance) or increase your borrowing cost, either by getting a more expensive loan or by borrowing a greater portion of the initial investment.

You're never going to be better off (after tax or otherwise) by deliberately reducing your income or paying more interest.  I have heard stories of mortgage brokers recommending high interest loans because they are "more tax efficient".

The tax deductions merely make the income shortfalls more manageable while waiting for capital growth.

Needless to say, there is no reason to negative gear into non-growth assets like cash, mortgage funds and bonds.  You should only gear into such assets when the yield you get from the investment exceeds your borrowing cost, which is rare unless your borrowing costs are very low or the income asset is a risky high yield investment.

Negative gearing scenarios can be engineered between multiple investors even when the overall portfolio is positively geared.  A typical example of this would be to invest all available cash in funds in the name of whichever spouse has the lower income, with the higher income spouse borrowing for a 100% geared portfolio in their own name.  With a 100% loan to value ratio its very hard to achieve positive gearing, so the high income spouse will be negatively geared even if the couple make more money in total from the investments than the borrowing cost on the high income spouse's portfolio.