NSW Shadow Minister for Health, Walt Secord, said the funding had been approved by the Parliamentary Budget Office and would afford a maternity unit for low-risk labours at the hospital.

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But Minister for Health Brad Hazzard has rejected the maternity unit model, because "it would put mum and baby at extreme risk".

Local mothers, councillor Jasmin Jones (acting as a private citizen), Bec Duncan and Lindsay Hollingsworth were thrilled by the news.

"After seven years of working on this, I am delighted," Cr Jones said. "To claw back maternity once it's gone is almost impossible. I've got goosebumps. It's been a long time in the making."

Cr Jones - who once gave birth on the Barton Highway, as did Mrs Hollingsworth - has campaigned for maternity at Yass Hospital as both a councillor and private citizen.

She began the Yass maternity petition with Mrs Duncan and Mrs Hollingsworth and was successful in getting in-principle support for it from the Yass Valley Council.

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Mr Secord said he had not been able to consult with the Southern NSW Local Health District (SNSWLHD) on the funding, due to pre-election constrictions (whereby the opposition party is required to seek information through the appropriate minister's office).

Minister for Health, Brad Hazzard, told the Yass Tribune it was "misleading, deceptive and irresponsible to indicate this would be a safe model to birth". He understood "the passion of some potential mums and other supporters to have a low-risk midwifery practice".

"However, there is no precedent anywhere in regional NSW to use this model, because the specialist medical advice is that it would put mum and baby at extreme risk.

"The advice I've had from medical experts is that it (giving birth) is really only safe in an environment where you have immediate back-up for intensive care and neonatal specialists.

"The experts are also telling me it's hard enough to get midwives into bigger practices associated with major hospitals and those health specialists don't believe they would be able to have a sustainable midwife practice (in Yass). 

"There would be gaps, which again would put the baby and mum's lives at risk."

But Mr Secord had no concerns about staffing a maternity unit in Yass. Labor "have also committed to 5500 new nurses in the first four years of government (if elected). So, I'm very confident that we would find the nurses to do it. This is a growing area," he said.

The local government area (LGA) population forecast for the Yass Valley in 2019 is 17,451 people; and 27,315 by the year 2036.

Chair of the Yass Hospital Community Consultation Committee, Jill McGovern, said a maternity ward at Yass Hospital posed "too great a risk."

She asked if the $5m included an operating theatre, because "even a low-risk facility must have a theatre for emergency cesarean," she said.

She also said that Yass Hospital was "bursting at the seams" and didn't see where the maternity unit would fit.

"Queanbeyan maternity is described as low-risk and it calls on staff from Canberra, so the obstetrics and pediatric teams visit. This is feasible because the time to travel to Queanbeyan maternity is within the parameters allowable for birthing. Yass is simply too far away and therefore too great a risk," Mrs McGovern said.

Labor candidate for Goulburn, Dr Ursula Stephens, was at the announcement with Mr Secord. She said she had researched the possibility of building a maternity unit at Yass Hospital.

"I've had long conversations with some of the consultants I have known in a previous life, who are consulting to NSW Health Infrastructure. They are devastated by the under-resourcing of this region's health services," Dr Stephens said.

To build a maternity unit at Yass Hospital would be "quite a complicated thing to do, so first of all, we'd need to make sure the facilities are updated and we'd need to find the space to do that."

Liberal candidate for Goulburn, Wendy Tuckerman, said she was concerned by Labor's announcement. "It appears this announcement has not been made in consultation with medical professionals and could possibly put lives at risk," she said.

"Normally, the electorate would welcome funding commitments in the lead-up to an election.

"However, I cannot welcome this announcement. This puts babies and their mothers at risk. Low-risk maternity services need to be complemented with full hospital services," Ms Tuckerman said.

The first sod turned for the $8 million Yass Hospital redevelopment was on Monday by Goulburn MP, Pru Goward, and Ms Tuckerman.

Richard Crookes Constructions has been appointed to commence work on the redevelopment, which will include:

The redevelopment is expected to be completed by May 2020.