Heat half the oil in a large non-stick saute pan over a low heat. Add onion, garlic, carrot and mushroom, stirring to combine. Cover and cook for 10 minutes, or until onion is soft.
Meanwhile to make meatballs, squeeze sausage mince out of casing into ½ tablespoon measures and shape into balls. If the mixture is sticky, roll balls with wet hands.
Heat remaining oil in a non-stick frying pan over a medium heat. Add meatballs in two batches, cooking for 4-5 minutes and turning regularly until evenly golden. Place meatballs on a plate until required.
Add passata and 1 cup water to the onion mixture and increase heat to medium. Add browned meatballs and cook for 10 minutes. Season with salt and pepper and add basil.