wtparry, I agree with the advice the others have given. Since I also have a Blue Heeler that didn't want to let go and likes to play tug, I thought I'd add some detail.
Have two of whatever you're playing fetch with, let's say a Frisbee.

Throw the first Frisbee and give your verbal command for fetch as the dog starts to chase it. Keep the second Frisbee behind your back until the dog is nearly back to you. When you produce the second Frisbee and throw it the dog will probably drop the first one at your feet as she takes off after it. Keep repeating this and as the dropping of the Frisbee becomes reliable and predictable start giving your "out", "give" or "drop it" command.
I also like the treat method and so does my dog.

Have a bag or pocket of small, soft, moist, tasty, easy to swallow treats with you. Throw the object to be fetched and when the dog brings it back hold a treat out for the dog to sniff. When she drops the object give her the treat while picking up the object. Repeat this as before giving your out command once the drop is becoming predictable. You can slowly phase out the treat giving until you give a treat only after every few retrieves.
My dog went from wanting to hang on to the thrown obect to being so eager for the treat he would drop the object before I wanted him to. When this started happening I began to withold the treat until the dog would hold the object until I gave the out command. Now he gets anything I ask him to and gives me anything when asked. And before Ron comments I'd like to say I don't ask him for anything he's not able to deliver.
There may be other and better ways to teach the fetch. These have worked well for my dog and me for the kinds of fetch we play.
Good luck!
DBZ