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Health Minister Dr David Clark has confirmed the new Dunedin Hospital will be built on multiple blocks in central Dunedin, including all of the former Cadbury factory site.

Dr Clark said construction would begin before the next election and will employ 1000 workers on site when in full swing and the aim was to have it complete by 2026.

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As indicated in the Otago Daily Times this morning the site will be made up of the western side of the Cadbury site, together with the block bordered by Hanover, Castle, Cumberland and St Andrew Sts.

However, rather than including only part of the Cadbury site, it will include all of it  as well as the Cadbury car park.

This means Cadbury World and the Cadbury Cafe on the site will close.

Cadbury ceased making chocolate at its Cumberland St site in March, although the Cadbury World tourist attraction remains open, and consent has been issued for it to move to the other side of the Cadbury site.

Dr Clark said the announcement  was a "red letter day for the people of the South who have waited too long for their new hospital.

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"Today’s announcement is a major milestone and means we will deliver on our commitment to start construction within this term of Parliament,” Dr Clark said.

Dr Clark said the site was chosen to maintain the compact and central nature of Dunedin’s health and education facilities while giving flexibility for the final design and allowing for further development later.

“Everyone knows the current hospital buildings are in a bad way, with leaks and asbestos - and they are deteriorating. I’m pleased that after years of delays we are finally on the way to providing the 21st century health facilities the people of the region deserve.”

The Government was in negotiations with the owners of the Cadbury site and has begun the process of purchasing the city block next door to the north.

“The hospital will not only be the largest building in Dunedin but also one of the most complex and challenging construction projects ever seen in New Zealand.

“When construction is in full swing it will employ 1000 workers on site. Construction will start before the next election and we are working towards completion in 2026.

“When it’s finished the new hospital will be the most modern hospital in New Zealand, ready to serve the people of the South for decades to come,”  Dr Clark said said.

Dunedin Hospital rebuild convener Pete Hodgson said the process will involve the Public Works Act, but not necessarily compulsory acquisition.

There were eight land owners on the block north of Cadbury, which included a Wilson car park, and many had found out only "very recently", he said.

"The ones that we have spoken to have been aware a hospital was coming . . .  and were mindful of the law of the land.

"We are in negotiations to buy the entire site including the old dairy.

"Those negotiations are not yet concluded but are well advanced." 

SDHB chief executive Chris Fleming said the announcement gives renewed impetus to the rebuild project.

"It helps us envisage the shape our new hospital will take. There are many different options on the table – for example, the main hospital may be on one site and out-patients on the other."

He added  that these decisions have not yet been made, and would be explored during the detailed design phase beginning later this year.

"The ability to develop our thinking around a physical space goes far beyond the walls of the hospital.

"It better enables us to make progress on the wider changes needed to build a network of care across the whole district, as we implement the primary and community care strategy and action plan.

"The goal is to create a more integrated system of care, that is accessible, coordinated, and delivered as close to home as possible, while being well supported by specialist services.

"A new hospital on this site is a critical piece of this picture.”

Today's announcement comes after a long wait for confirmation of where the new hospital will be built.

During that wait the Dunedin City Council launched a campaign for the hospital to be built in the central city.

Ahead of last year's general election then prime minister Bill English announced the Government would be spending $1.2 billion  to $1.4 billion on replacing Dunedin's ageing hospital.

Following the 2017 general election, Dr Clark installed former Labour health minister Pete Hodgson as the new convener of the Southern Partnership Group - the body co-ordinating the development of the hospital.

In December, he ruled out several sites mooted for the hospital - including the current site.

The rebuild of the hospital has long been called for because of the dilapidated state of the current buildings, which were erected between 1935 and 1993,

A 2012 report suggested the clinical services building had a life of five years.

Today, vital departments such as emergency, radiology, the fracture clinic and day surgery struggle to tend to patients in a building which leaks, is full of asbestos and has an outdated and inefficient layout.