NSW Treasurer Daniel Moohkey has called a private operator’s $2 offer to return Calvary Newcastle Hospital to public hands a backdoor to a bailout, as parliament investigates allegations of dangerous mould infestations, maintenance failures and cover-ups.
Victoria Rigg, director of the private consortium Novacare, which is responsible for the Newcastle hospital’s infrastructure and maintenance under a private-public partnership, told a parliamentary inquiry on Tuesday that it had twice offered to sell the hospital back to the NSW government for $2.
The offers came after months of public scrutiny over alleged delays and failures by its operators to remedy a protracted infestation of the potentially deadly Aspergillus fungus, electrical hazards, and non-compliant cladding.
Sixteen patients were identified as having invasive Aspergillus infections between January 2019 and April 2025, according to an internal document dated May 7, 2025. In January, cancer patients were relocated, and elective surgeries were cancelled after maggots rained down from air conditioning vents onto patients’ beds.
Moohkey, when asked why the offers had been rejected, said: “Often these offers [come] with strings attached … they are bad value for taxpayers, and often are a back door request for a bailout.”
Moohkey said on Wednesday he was confident NSW Health applied good judgment when rejecting the offers, and the details were commercial in confidence.
A NSW Health spokesperson said the $2 offer was not value for money for taxpayers “because it did not take into account the potentially tens or hundreds of millions of dollars of liabilities and risk that would also be transferred to the state”.
Rigg said the offers were made after Novacare members – including Honeywell, responsible for building maintenance – could not resolve “who is going to pay for the upgrades”.
Law firm Shine Lawyers is investigating the effects of mould exposure on families of loved ones treated at Calvary Mater and other hospitals, including Royal Prince Alfred in Camperdown.
Shine Law clerk Bailey Napier, who lives near Calvary Mater, said that the allegations raised at the inquiry would be deeply upsetting for patients and families who trusted that they and their loved ones would be safe and cared for.
“I understand how painful it may be to now be left with fears, questions and uncertainty about whether that trust was broken,” Napier said.
A spokesperson for Honeywell said the organisation had engaged constructively with the parliamentary inquiry and firmly rejected the allegations.
The spokesperson said Honeywell’s contractual scope did not extend to rectifying structural or design defects, including cladding issues and facade leaks, and that it had taken steps beyond its obligations to help prevent further water ingress and reduce the mould risk.
Honeywell facilities director James O’Brien did not appear at the hearing. In a written statement, O’Brien said the negative coverage and unsubstantiated allegations against him had been very damaging to his family and reputation, and that they would have been worse had he appeared.
Opposition health spokeswoman Sarah Mitchell said the NSW government should take concrete steps to return the hospital to public hands, and urged it to be transparent about the costs to taxpayers under the Novacare proposal.
“Staff are at breaking point, and confidence in the current arrangement has completely collapsed,” Mitchell said.
In response, Health Minister Ryan Park said Mitchell needed to “explain why she thinks NSW taxpayers should accept tens or hundreds of millions of dollars of liabilities and risk”.
Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.
Jessica McSweeney is a reporter at The Sydney Morning Herald covering state politics and urban affairs.Connect via email.