Midwives are sounding a word of caution about yesterday's Budget, saying the announced funding for the sector "will not stop the shortage".

The 2018 Budget includes $103.6 million of new operating funding over the next four years to support community midwifery services, plus $9m in 2017/2018.

About half of the funding will go towards an 8.9 per cent "catch up" increase in fees for community-based midwives, to close the pay gap between them and their DHB-employed colleagues.

It will impact more than 1400 lead maternity carers, the Government said.

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"There is no question that over the last decade the fees paid to community-based midwives have not kept pace with the pay increases of their colleagues employed by District Health Boards [DHBs]. That is simply not fair, and the 8.9 per cent increase will address that gap," Minister of Health David Clark said.

The New Zealand College of Midwives said it appreciated the funding but was quick to point out issues with how the $103.6m was broken down and what was left behind.

"This will not stop the shortage of midwives," it said in a statement.

It said the 8.9 per cent increase equated to about an extra $200 per woman for a midwife over nine months of care.

"This will not address the pay equity issue despite an undertaking by the ministry to do so. Disappointingly the funding model co-designed last year by the ministry and the college to fix the inequities has not been embraced."

Of the $103.6m, $10m (over two years) will go towards recognising the self-employed nature of community midwifery and the costs associated with that model.

There is $16m over four years allocated to covering the costs of a second midwife.

At the moment, midwives who call on colleagues or their back up midwife to take over care during a lengthy labour, or to cover sickness and holidays, have to fund this out of their own fees.

And $27.6m over four years is to account for population and demand pressures, the Government said.

That leaves $50m ($12.5m a year over four years) for the 8.9 per cent lead maternity carer fee increase.

The college's deputy chief executive Alison Eddy said the extra funding was "of course welcome".

"However, the college has been working hard with the ministry on the new co-design funding model and although we had never expected the entire co-design to be funded in this Budget, we are dismayed that it has not been fully embraced."

Eddy said the college had a lot to consider and discuss with its members about the Budget and it would continue speaking to the ministry over the coming days and weeks.

Sarah Thorn, 37, a self-employed midwife in Tauranga, welcomed the Budget announcement but said it was too early to celebrate.

"It's definitely a positive sign that we've been mentioned and there's been consideration towards midwives, but whether that's going to be enough to make a difference for us is yet to be seen."

She said she and her colleagues were still waiting to hear more.

"It doesn't really mean a huge amount to us at this point because nothing's been confirmed from our College of Midwives to know how this will be incorporated in the co-design," Thorn, who is in her seventh year as a midwife, said.

"We've all been waiting and watching and talking about it amongst ourselves as to what that means. But we can't speculate yet."