She said community, or self-employed lead maternity carers (LMCs), were contracted to the Ministry of Health and forbidden from charging to cover rising costs, unlike GPs, who can pass additional costs onto clients.
"The only way to make more money is to sign on more women, but this could compromise the safety or service."
Community midwives constitute about a third of the midwifery workforce, with the remainder working as core midwives in hospitals.
She said dealing with pregnancy in the community and lower intervention rates was acknowledged as the best model, but with the intense strain, lure of better wages, working hours, holidays, sick leave, and seniority-based increases, she had witnessed many midwives opting to become core midwives.
"We are doing this for love, but you can't eat love."
She said the government was perfectly happy to keep paying low wages as long as it could keep touting a successful system.
"The system is resting on our shoulders and we are carrying it, but eventually our backs will break.
"I think the Ministry of Health are failing us."
Ms Cassie said the wage had to be considered in the context of a student loan combined with the cost of setting up a practice.
North Waikato midwife Sheryl Wright said compulsory costs included the annual practicing certificate ($400), indemnity insurance ($695), ongoing education ($500) and Midwifery Standards Reviews ($150).
"The midwife must pay all her own expenses. This will include things such as clinic rent, fuel and running costs for her vehicle, telephone expenses, postage, stationery, equipment replacement, insurance, ACC cover, advertising and accountancy fees ... In total, average expenses come to around $25,000 per year - excluding student loan repayments, which are not considered business expenses."
The problem is compounded by the fact payments are dependant on periods of care, so if expectant mothers enrol late or leave the midwife's care early, they lose income.
Community midwives are the only health practitioners who do not have inflation factored into their contract, and Ms Wright said rectifying this had to be a priority. She said every time inflation or the CPI (Consumer Price Index) increases, the only way to renegotiate wages was to renegotiate the whole contract.
"This just goes in the too-hard basket," she said.
The New Zealand College of Midwives filed a pay parity discrimination case on the basis of gender at the Wellington High Court on Monday under the New Zealand Bill of Rights Act.
College chief executive Karen Guilliland said the court action has been 20 years in the making.
"Midwives haven't been paid properly since 1996.
"This year the Ministry is only allocating $2.1 million as a fee increase for payments available for approximately 1000 LMC [community] midwives and over 52,000 mothers and babies. This equates to around $41 extra per birth."
In a statement, the college said community midwives were paid the equivalent of unskilled or junior staff, despite being university-educated health professionals who must complete twice the number of clinical hours as nurses. Midwife advisor Alison Eddy said the college had become involved when the last pay rise in 2012 was far below expectations.
"It was 2.5 per cent - it was pretty disappointing. It just hasn't kept pace with cost."
She said the only reason the ramifications had not been truly felt yet was because a drop in the birth rate had coincided with an increase in the midwife workforce.
She said many graduates had a shock when the joined the workforce.
"They enter the workforce and realise the pay's rubbish, but they have paid a lot of money to become midwives.
"The goal is to have long-term mechanism in place to give regular increase in pay that reflect increased costs and expectations on services."
A Ministry of Health spokesperson said maternity services are free to eligible women and the only services that can be charged a co-payment are specialist services such as obstetricians or radiologists.
"Funding for the payment of claims under the Section 88 has increased to $146.8 million per annum from 1 July 2015. This is a net increase on the previous financial year of $2.1 million. An announcement on how this money will be allocated is expected in the near future."
Community midwives are paid under Section 88 of the Public Health and Disability Act 2000, which does not allow for negotiation of pay or collective action.
When asked why midwives have not received increased funding, the Ministry said increases were subject to the outcome of Budget bids.
"There have been five changes in fees for delivery of maternity services since 1996 - in 1998, 2002, 2005, 2007, when there was a 9.2 per cent increase, and 2012 when there was a 2.5 per cent increase."
The spokesperson said the the rates increases for years prior to 2007 could not be calculated in the time available, and the Ministry had not witnessed any marked movement out off community roles.
"The total number of midwives working as community (LMC) midwives has increased and there has been a significant increase in the proportion of pregnant women receiving care from an LMC midwife."
Previous satisfaction surveys have shown high and steady levels of satisfaction from expectant mothers.
A 2011 survey found 89 per cent of women were satisfied or very satisfied with care from community midwives.