This article is more than 1 year old

This article is more than 1 year old

Barnaby Joyce and two other Nationals MPs have backed measures to improve small businesses’ access to justice, in a move which may force Scott Morrison to overturn government policy or risk a second lower house defeat on a substantive bill.

In comments to Guardian Australia Joyce, Keith Pitt and Andrew Broad all expressed in-principle support for measures designed to help in court cases of farmers and suppliers taking on big business like Coles and Woolworths for alleged misuse of market power.

On Thursday night, Labor and the crossbench combined in the Senate to pass amendments to an obscure government treasury bill over Liberal objections, after Nationals senator John Williams signalled they had support from the junior Coalition partner.

Under the amended bill, small businesses will be able to apply in court before launching major legal action to escape paying costs even if they lose a competition law case against larger rivals.

The Treasury Laws Amendment (2018 Measures No5) bill now looms as a time-bomb for the Morrison government when parliament returns on Monday, likely to cause a loss in the House of Representatives as occurred on Wednesday with the medevac bill unless the government supports the bill with Labor’s amendments.

Joyce told Guardian Australia he would not “telegraph [his] punches” on how he will vote but the “whole raison d’etre of the Nationals is to support small business”.

“One of the reasons we’re so strong in our support of general divestiture powers in the power market is because we hate to see small businesses walked on by massive businesses with market power that means everything is stacked their way,” he said.

“Anything we can do to assist small business get a more just market we would support – I would support – I’m not leader anymore, I can’t say what others would do.”

Joyce said court orders exempting small businesses from paying their opponents’ legal costs were “the only way they won’t live in fear” of adverse costs orders.

“At the moment they don’t take on unfairness in a case not because they don’t think they have a case, they worry they can’t pay for the case if they lose.”

Pitt said he was supportive of measures to allow small business to take on cases without penalty but had not read Labor’s amendment and had an “open mind” how to achieve that outcome.

“Small business is significantly disadvantaged when you have very large companies that come do some practices that shouldn’t be allowed, drive them out of business, and they don’t have resources to take them on in court processes,” he said.

Asked if he would support the measures despite Liberal opposition, Pitt replied: “The history of the last two parliaments is that any number of amendments pass that are agreed on by the major parties.”

Broad said: “I don’t know if it will get on next week’s debate but anything that stops Coles doing the wrong thing by Australian farmers would gain support by myself and other Nationals.”

The Coalition previously voted against the measure in a 2017 private senators bill and the Liberals were set to do so last night in the Senate until finance minister Mathias Cormann intervened, accepting the government didn’t have the numbers.

Labor’s shadow assistant treasurer, Andrew Leigh, said Cormann had been forced to “capitulate [and] call off the vote” when he “realised the Nationals might cross the floor”.

Andrew Leigh (@ALeighMP) Last night, the Senate passed Labor’s Small Business Access to Justice policy, attached to a Government bill. My favourite moment: when Mathias Cormann realised the Nationals might cross the floor & capitulated, calling off the vote. #auspol pic.twitter.com/byQg1d5mjM

“Now that the amended bill passed the Senate, it will return to the House of Representatives, where Scott Morrison has the chance to perform a last-minute backflip, and finally support small business and competitive markets,” Leigh said.

The Nationals are also pushing for the big stick legislation, shelved by the government on Thursday, to come back to parliament.

Joyce said it should come back to parliament “as soon as possible” and the government should at least have left it on the notice paper to signal it was committed to giving courts power to break up energy companies who abuse market power.

The Liberals and Nationals frequently clash on questions of competition law, particularly measures to tackle the market power of banks, big energy companies and Australia’s grocery duopoly.

Malcolm Turnbull agreed to introduce the effects test as part of the Coalition deal with the Nationals.

In late 2017 an insurrection within the Coalition by the Nationals – many of whom threatened to support a Labor and Greens push for a parliamentary inquiry – forced the Turnbull government to call a banking royal commission.