Financial penalties imposed under the Mater public-private partnership (PPP) have surged to about $300 million.
Novacare director Victoria Rigg told the Mater inquiry that the abatements were "close to $300 million", a figure that NSW Health confirmed.
An internal NSW Health Ministry document said these "abatement fines" against Novacare were for "non-compliance with their obligations under the contract".
Ms Rigg said these abatements were disputed.
They were intended to be withheld from service payments, which NSW Health makes to Novacare for its role in managing and maintaining the hospital.
However, NSW Health Infrastructure chief executive Emma Skulander said only $3.7 million had been withheld to try to keep Novacare afloat.
The $300 million figure emerged at the third hearing of the parliamentary inquiry into the Mater mould and maintenance scandal in Sydney on Thursday.
The figure emerged after Novacare was questioned by Hunter MLC Emily Suvaal, a member of the NSW health committee running the inquiry.
A Novacare letter to Hunter New England Health in April said the abatements were previously $177 million.
Ms Skulander said the abatements rose with NSW Health pressure on Novacare to re-open ward 5D, which was closed due to mould contamination.
Interestingly, Novacare told the hearing that the initial abatements were imposed in the 12 to 14 months before March 2024.
NSW Health commissioned independent consultant Covaris to do an engineering review for Hunter New England Health (HNEH) in 2023-24 for "maintenance improvement" at the Mater.
The engineering report, dated June 2024, confirmed that the HVAC system had "no dehumidification", which was pinpointed as a probable cause of the mould issue.
The abatement fines relate to payments withheld from Honeywell, the US corporate giant that Novacare subcontracted to do maintenance work at the Mater.
Whistleblowers have accused Honeywell of corruption, falsifying records, shredding documents, intimidation and maintenance failures at the Mater.
The company has denied the allegations.
Ms Suvaal pressed Novacare to update the inquiry on its financial status, amid discussion about the company's financial position.
Novacare has offered to sell the private arm of the Mater PPP to the NSW government for $2, as the company was headed for voluntary administration.
The Mater operates under a PPP between Novacare and NSW Health's Health Administration Corporation (HAC).
Liberal Susan Carter asked Novacare at the hearing "what conversations have you had with the state over the $2 offer?"
Novacare offered to sell the private arm of the Mater PPP to the NSW government for $2, as the company was headed for voluntary administration.
NSW Health rejected the offer, saying it was "not in a position to accept any of the Novacare entities' liabilities".
Novacare director Victoria Rigg said "we met with NSW Health and Treasury and their legal teams".
Ms Carter said: "Were those meetings held before the state declined the offer?"
Ms Rigg replied: "No".
Ms Carter said: "The state said no thanks and then Treasury met with you?"
Ms Rigg replied "yes".
Ms Carter said: "That's an unusual process isn't it?"
Novacare director James Ward replied: "Yes".
Ms Carter said: "Have you been given reasons from Treasury or [NSW] Health why they declined the offer to sell back to the state?"
Ms Rigg replied: "The feedback we got was that given the time available, the state wasn't able to properly consider the offer".
"Because we had said we wanted a response by April 30. Because that was the date we lost our asset management team," she said.
"We were able to find someone else to replace them, which has allowed us to keep operating."
Ms Suvaal asked Novacare to update the parliamentary health committee on its "level of solvency".
Ms Rigg replied: "We're still in a position where we're working with NSW Health and the bondholders to try and ensure Novacare remains solvent so we can work through a solvent solution".
Ms Suvaal asked: "Who are your equity investors and bondholders?"
Ms Rigg replied: "We don't know who the bondholders are. As is common, they sit behind security trustees. From what we understand, they're a large number of small mum and dad investors."
However, Ms Rigg also said conversations had occurred "between the bondholders and the state directly".
"We're all working towards finding a solution, which allows Novacare to continue to operate and avoid voluntary administration," she said.
Ms Rigg said at the last hearing in May that about $50 million of Novacare's liabilities were for "outstanding bonds", which appear to relate to investors who loaned money for the PPP.
Ms Suvaal asked why Novcare was considering voluntary administration.
Ms Rigg replied: "The pressure of the constant dispute and the cost of managing the dispute".
This related to the dispute over the $300 million in abatement fines that NSW Health had imposed on Novacare for "non-compliance with their obligations" under the Mater PPP contract.
"It's the cost of managing the disputes that's putting financial pressure on Novacare," Ms Rigg said.
She said responses to letters over NSW Health breach notices were significant.
"I would have thought we're probably looking at $100,000 or $200,000 a month in legal fees," she said.
Ms Suvaal asked whether "your expenses currently exceed revenue".
"What is your current situation now - your forecasted cash flow shortfall?" she asked.
Ms Rigg replied: "We continue to spend more than we receive in revenue. We have money sitting in the bank account that we're currently spending."
Calvary Mater nurse Camilla Smith told the hearing that staff had been left to "manage the consequences of ongoing failures" at the hospital.
Ms Smith said the mould problem had not been fixed, despite government promises.
"What has changed? Nothing," she said.
Ms Smith added that the government had not dealt with the loss of beds caused by the mould problem.
She was concerned about bed surges in winter.
"It's not safe," she said.
Staff were "deeply shaken" and had lost confidence in the system, amid the hospital's "ongoing infrastructure failures".
She questioned why other public hospitals had "rapid responses" to mould issues, but the Mater problems had been "unresolved" more than a year after staff reported major concerns.
She said staff had been "misled about the depth of non-conformity" to maintenance requirements under the hospital's public-private partnership.
Ms Smith, a NSW Nurses and Midwives' Association member, said an "enormous physical and psychological burden" had been put on staff.
She said staff had been left to make sure the hospital's "150 HEPA filters were switched on and functioning" to filter mould in the hospital environment.
Most of the filters were "bought from Bunnings" and were "not commercial grade", she said.
The number of HEPA filters had steadily increased, as more mould testing was done throughout the hospital.
