I decided to go to our local public hospital and go through their midwife program. I've only had to go to about 4 appointments so far as they decided I am "low risk". They also have a relatively new maternity section opened in 2003 which is very modern and has lots of high tech stuff and a nicu. I've read its an excellent hospital.
I decided against the private hospital nearby as the Obs there dont seem to take new patients often and you literally have to book in at the moment of conception, and their fees are just ridiculously high (like $5000!!) and our private health insurance doesnt cover much of it even though we have the top cover inc obstetrics. I also got told they dont deliever babies that come very early and you and bub get transfered to the public hospital anyway.
I didnt really think an ob was necessary - I figured that the midwives are highly trainined and should there be an issue, I will still be able to see an ob at the public hospital.