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Tory MLA Wes McLean said he would not pre-judge the health minister's final decision on whether to build a new hospital outside of the flood zone in Perth-Andover. (CBC)

People in Perth-Andover are dismayed to hear the Alward government has called off plans to build a new, smaller hospital in the northwestern community of Perth-Andover.

Dean McAllister, a councillor in the village, said the Health minister told council last year that a new hospital would be built on higher ground, after the existing Hotel-Dieu de Saint-Joseph hospital was damaged by flooding in March of 2012.

McAllister said councillors had no idea the plan wasn't going ahead until last night's council meeting.

"We were told fairly early at the meeting that the hospital project had been cancelled, straight up cancelled" said McAllister. "We were sitting around the table, we were shocked."

Victoria-Tobique Progressive Conservative MLA Wes McLean said there was opposition to the smaller hospital because it would have meant less capacity, including fewer beds.

"I didn't feel a great deal of public support for the new facility," said McLean.

"At any rate, the decision is made, let's get the second floor of the old wing, the old Hotel Dieu wing, refurbished and reopened, because that will create some badly needed space and it will continue with being Hotel Dieu."

Late last year, Health Minister Ted Flemming hinted a smaller facility would be built above the village's flood plain.

He said he has since learned that doctors and others wanted more in the new hospital than what the province could afford.

"With the lack of enthusiasm and the requests from the medical community, whether they said, 'we want a certain number of beds, a certain number of this in order for us to buy in,' that would have cost [upwards of] $40 million and it's just not viable to do that," Flemming said.

"So we'll go back to our original plan, which is to put the money into the existing hospital."

McLean said keeping the existing hospital will mean it will be exposed to the risk of future flooding.

He said this decision will not affect the scheduled closure of the hospital's operating room later this month.

The hospital's labour and delivery services were moved to Waterville after the flood and will not be moved back.

Its operating room will be closing at the end of this month.

The provincial government has already set aside $8 million to relocate or flood-proof low-lying homes in Perth-Andover and the Tobique First Nation.