The Tasmanian Government has halted work on a new funding model for the state’s fire and emergency services after last year proposing reforms that included abolishing a levy on business insurance policies.

Liberal Premier Jeremy Rockliff yesterday also announced that a state election would be held on March 23.

The proposed levy reform has proved controversial, sparking opposition from property, local government and farming groups, while the Labor opposition has said the Government should “go back to the drawing board”.

Police, Fire and Emergency Management Minister Felix Ellis said yesterday the Government has “paused” the working group tasked with reforming fire levies, while remaining committed to governance and structure changes to the fire and emergency services.

“There is no unanimous agreement [on] the design of a new funding model, despite constructive and positive conversations and engagement,” Mr 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 (ICA) says the pause is “profoundly disappointing”.

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and overwhelming evidence demonstrating the levy’s unfairness and inefficiency, Tasmanians remain stuck with this outdated model of revenue raising,” CEO Andrew Hall said.

“Every other state has abolished or has committed to abolish similar levies, leaving Tasmania as the last tax standing, further disadvantaging its businesses and their customers.”

ICA 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.

According to State Fire Commission data, revenue collected from insurance customers jumped 25% from $33.4 million in 2021-22 to $41.8 million a year later.

“Not only is the [levy] unfair, but it also discourages proper insurance coverage,” Mr Hall said.

NSW is the only mainland state that still funds fire and emergency services through a levy on insurance, but Premier Chris Minns said in November the charge would be removed and Treasurer Daniel Mookhey would lead a consultation on the changes.