George Christensen has put his name to a reported backbench revolt against the Turnbull government’s proposed crackdown on payday lending, just a day after Scott Morrison denied he had been enlisted to water down the reform.

The Nationals MP told Guardian Australia he turned to small credit lending in his 20s to pay for household goods and unexpected bills when he was “hocked up to the eyeballs in debt”.

On Friday five consumer groups wrote to parliamentarians noting the government circulated an exposure draft in October with a promise to introduce the bill by the end of 2017 but had failed to do so.



On Monday the Courier-Mail reported that eight Liberal National party MPs had revolted over the payday lending bill and enlisted the treasurer to overturn cabinet’s support for it.

Under Labor scrutiny in question time, Morrison responded that the report was “entirely false”. “This government is very concerned about the impacts of people on low incomes to ensure they do not get themselves into greater difficulty,” he said.

The reform, first unveiled in November 2016 by the minister for revenue and financial services, Kelly O’Dwyer, imposes a ceiling on the total payments that can be made under rent-to-buy schemes and restricts the amount rental companies and payday lenders can charge customers to 10% of their income.

Christensen said the reforms were “mostly OK” but the 10% income credit limit “won’t achieve anything for consumers but will ensure that small credit lenders across the nation go to the wall”.

“Where will people in desperate need then go to access finance?”

Christensen said that in his 20s when he was going through university on a “meagre income” with a maxed-out credit card he had “no other option than to go to a small credit lender”.

“If it wasn’t for the small credit lender I would have been stuffed – unable to pay a heap of unexpected bills and unable to buy a fridge and washing machine.”

Christensen said he had raised the issue with the previous minister, Michael McCormack, but not Michael Sukkar, who is now responsible.

In their letter to parliamentarians, the Consumer Action Law Centre, the Financial Rights Legal Centre, Financial Counselling Australia, Choice and the Indigenous Consumer Assistance Network warned that “unaffordable loans … result in people being unable to pay for basic needs or default on other necessary commitments”.

The letter noted that an independent review had found that all consumers would be able to access at least one $1,000 small amount credit contract during a 12-month period.

The Consumer Action Law Centre director of policy, Denise Boyd, said: “We expect the government to pass the legislation as proposed and any further delay would be a terrible outcome for people experiencing financial stress who’ve been lured into unaffordable loans and leases.

“There is cross-party support for the reforms, which are sensible and keeps the credit for those who need it available while reducing the possible harm caused by repeat borrowing by reducing the possibility of a debt spiral.”

On Monday the Australian reported that the Coalition had been lobbied by the Institute of Public Affairs and the appliance rental industry body the Consumer Household Equipment Rental Providers Association over the bill.

In Senate question time on Monday, the finance minister, Mathias Cormann, said: “The government of course recognises that small amount credit contract lenders and consumer lease providers play an important role providing credit to consumers who, in many cases, are not able to access mainstream finance.

“We will ensure vulnerable consumers are afforded appropriate levels of consumer protection while continuing to allow access to small amount credit contracts and leases.”

Cormann said the reforms, which contain grandfathering provisions for existing contracts, “will be processed this year” and apply 12 months after the passage of legislation.