Tasmania’s Government has shelved plans to reform its fire and emergency services funding after the proposed model, which would have removed a levy on business insurance, sparked protests from local government, farming and property groups.

The Rockliff Liberal Government announced it was “pausing” work on the changes last Wednesday, the same day it called a state election for March 23.

“There is no unanimous agreement [on] the design of a new funding model, despite constructive and positive conversations and engagement,” Police, Fire and Emergency Management Minister Felix Ellis said.

“We will always listen to Tasmanians and strive to be fair to households, fair to business, fair to our regions and also fair to our emergency services so they can save lives. We will not be changing the fire service levy model without agreement.”

The Insurance Council of Australia says the pause is “profoundly disappointing” and the National Insurance Brokers Association (NIBA) says it is a “significant setback” for the state’s businesses, fire and emergency services, and the broader community.

“The decision by the Tasmanian Government to halt progress on fire service levy reform is deeply disappointing,” NIBA CEO Phil Kewin said. “These reforms were crucial steps towards a fairer and more efficient system, benefiting Tasmanian businesses and communities.

“We strongly urge the next Tasmanian Government to resume the industry working group and prioritise the implementation of comprehensive reforms that address the long-standing challenges associated with the current levy structure.”

NIBA says the reforms aim to address these issues by shifting the levy from premiums to a property-based charge, ensuring a fairer distribution of costs and relieving pressure on businesses already facing financial strain.

The Insurance Council says the levy adds up to 28% to the cost of a range of commercial policies, particularly affecting those seeking protection against fire damage, and it has delivered recent windfall gains to the Government while adding to the cost of doing business.

“Despite years of reviews, consultations and overwhelming evidence demonstrating the levy’s unfairness and inefficiency, Tasmanians remain stuck with this outdated model of revenue raising,” CEO Andrew Hall said.

The Government established a working group last year to finalise a funding model after the release of proposals prompted a backlash.

The Tasmanian Farmers and Graziers Association had said two options put forward would remove levies from insurance but substantially increase those paid on local government rates.

“While we support the move towards a fairer, more efficient funding system with a single source of funding, in some instances we’re seeing farmers’ contributions increase under one proposed model by a staggering 1000%, and under the other model by at least 230% in contributions, which is unacceptable and certainly not equitable,” association President Ian Sauer said last year.

Mr Ellis said last week the Government remained committed to progressing governance and structural changes to the fire and emergency services.