Hi Sarah

Public hosptial or not that treatment isn't good enough. There may be nothing that can be done until the baby is born, but I think at least a paediatrician should be consulted so that a plan can be developed. It isn't up to the midwife to have the final say.
I agree with Spring.

I had my first baby in the public system and it's fine when you have a nice, uncomplicated normal pregnancy. But if you have a problem it can be a pain the you know what.
Your SIL needs to get REALLY assertive and stand up for herself and her baby. Even if she is under shared care there will be an obstetrician available through her midwifery clinic - she needs to ask to see him/her, at the very least. I agree it's not a decision for a midwife who's not familiar with her family history to be making off the cuff like that.
My experience in the public system when I had issues with my pregnancy was basically ask questions, and keep asking until someone gives you a satisfactory answer. Once they realise that you won't be brushed off or easily shut up then they will start giving them to you.
Does she have someone who can go with her to her appointment and back her up, often if there is someone else in the room "witnessing" the conversation it will be taken more seriously as well.
Good luck I hope it's all ok for her.