Former Labour cabinet minister Pete Hodgson will oversee the rebuild of Dunedin Hospital.

Photo: Supplied

Hawke's Bay business consultant Andrew Blair, who was appointed to the role by the former National government, was informed earlier this week his contract has been terminated.

Mr Hodgson is one of two Dunedin-based appointments by Health Minister David Clark to the Southern Partnership Group, which oversees the more than $1 billion rebuild of Dunedin Hospital.

Dr Clark said it was important that a local person led the rebuild.

"We knew that we needed somebody local to drive the project. We've put two more local people on the project. There are still going to be people from out of town involved, but we need to give the public assurance that this is being given due priority."

Dr Clark said he was thankful for the work Mr Blair had done, and would continue working with him in his roles as chairman of the Capital and Coast and Hutt Valley DHBs.

Photo: RNZ

National Party health spokesperson Dr Jonathan Coleman said the move jeopardised the tough timetable set for the Dunedin Hospital rebuild by the new Minister.

He said the appointment of Mr Hodgson was "exactly the wrong move for progressing the rebuild", and Mr Blair had done an "excellent" job.

Dr Coleman also questioned the appointment of what he described as Dr Clark's political mentor, Mr Hodgson, as chair.

He said it was evidence Dr Clark was relying on former Labour health ministers to tell him what to do and the rebuild would be shaped by political interests.

Senior doctors welcomed the move, but said more needed to be done, including extensive clinical leadership in the design of patient services and facilities.

Association of Salaried Medical Specialists executive director Ian Powell said it was a sensible move to stand down Mr Blair.

"[He] has limited knowledge of the wider Southern DHB region's hospital needs. His hospital experience is limited to much smaller and less complex private hospitals."