Mr Harwin turned a ceremonial sod on the project on Friday alongside mayor Kay Fraser, University of Newcastle Vice-Chancellor Alex Zelinsky and the building's designer, former UON student Samantha Bailey.

The minister said the project reflected a "desire" among many NSW communities "to come up with more flexible spaces that can be used by a mix of people".

"This is going to be a facility that is much-loved in this community and is going to help transform community arts and support emerging artists and performers in this part of the state," he said.

"This is a community with a long cultural tradition; many artists have lived here, many other arts practitioners have lived here. I just think this facility is going to help take things to a new level."

The Multi-Arts Pavilion, which is part-funded by the NSW government, was designed by Ms Bailey as part of a competition run in conjunction with the university.

University of Newcastle Vice-Chancellor Alex Zelinsky said the future building would be the "new focal point for arts and culture in Lake Macquarie".

"We can't wait to see Samantha Bailey's design come to life," he said.

"Giving our students the opportunity to get real-life experience while they're still studying is a focus for our institution - it's what makes them ready for life after university.

"Our partnership with Lake Macquarie City Council is enormously important - we know that by working together we can achieve great things for our communities. MAP is just one example."

The council's arts, culture and tourism manager, Jacqui Hemsley, said the facility would help shape the future of art experiences in the region.

"We want to build an immersive experience that creates a connection between location, art and audience that visitors won't find anywhere else," she said.

"MAP is an agile and flexible venue in a high-use location.

"It will be an ideal stepping-stone for emerging artists, and a platform to present alternative productions to new audiences.

"We will be hosting engaging, experimental and unusual works and public programs."

Construction will start in the new year and is expected to be completed by mid-2021. Expressions of interest are now open for an illuminated artwork to be installed on the building's exterior and an artwork nearby in the park. Artists can apply online at lakemac.com.au.

Mayor Kay Fraser said the MAP would attract an estimated 45,000 extra visitors to the city each year.

"Set in one of the east coast's most beautiful lakeside parks, MAP will increase local tourism revenue by an estimated $2.5 million a year," she said.

"MAP will add to what is already one of our region's recreational and event hubs.

"Its performances, shows and outdoor events will bring new life, energy, sound and creativity into Speers Point Park after hours."