The demolition of the former Bendigo hospital maternity ward began on Wednesday, with Bendigo East MP helping tear down the building in which she was born.
The Kurmala building will make way for Bendigo Health’s new multistorey car park and helipad, as well as new retail and conference facilities.
Ms Allan said said the day was one of “mixed emotions”.
“I was born in the Kurmala building, as were my parents and grandparents,” she said.
“There are a lot of happy memories in the old hospital site, but there are also sad ones. It is important to acknowledge the part these buildings have played in the lives of so many.”
The demolition is expected to be completed by mid-June to be followed by the new build and the construction of an “airlink bridge” to the new hospital.
The new car park will have a capacity of 550 spaces.