Gun-toting paedophile priest...

An Australian inquiry Wednesday heard of a gun-toting paedophile priest who made children kneel between his legs during confession as Vatican finance chief Cardinal George Pell admitted a time of "crimes and cover-ups" within the Catholic Church.

The Royal Commission into Institutional Responses to Child Sexual Abuse in Sydney was hearing evidence from Pell, via video link from Rome, for a third day, with the senior Australian official again facing intense questioning about how much he knew.

The inquiry is currently focused on the town of Ballarat and the city of Melbourne in the state of Victoria, where Pell grew up and worked, and how the church dealt with complaints, many dating back to the 1970s, against the Catholic clergy.

Gail Furness, the top lawyer leading questioning in the inquiry, centered attention Wednesday on Doveton parish priest Peter Searson, who Pell described as "one of the most unpleasant" men he had ever met.

The church failed to remove him from his position in the 1980s despite mounting evidence that he was abusing children.

The commission heard that one complainant said Searson brandished a gun and made children kneel between his legs when they went to confession, during which he had a tape recorder.

Pell called Searson's behaviour "abhorrent" but denied knowing about it at the time, and suggested that Archbishop Frank Little, now deceased, should have done more.

"Archbishop Little for some reason seemed incapable or unable to deal with Father Searson, or even to provide any adequate level of information about the situation," said Pell, suggesting he likely took no action in order to protect the church's reputation.

The inquiry also heard Searson swung a cat by its tail over a fence, killing it, showed children a dead body in a coffin and held a knife to the chest of a young girl.

Pell, as an auxiliary bishop in the Melbourne archdiocese, said he sought a briefing from the Catholic Education Office after a delegation came to him in 1989 complaining about Searson, but claimed the office "deceived" him about what was being done.

Furness suggested Pell's evidence was designed to deflect blame from him for doing nothing about the priest, to which he replied: "That is not accurate."

The senior Vatican official has claimed this week that at least two archbishops and other people in authority all lied to him by not revealing what was happening in Ballarat and Melbourne.

"This was an extraordinary world. A world of crimes and cover-ups. And people did not want the status quo to be disturbed," he explained.

Can't remember

Furness also questioned Pell on Brother Edward Dowlan, who was based in Ballarat and Melbourne. He was jailed for abusing boys in 1996 and then again in 2015.

Pell, an adviser to the Ballarat bishop at the time, said he could not remember, when asked if he was aware of specific allegations of child abuse against Dowlan but admitted he should have done more.

"I can't remember in any detail except that there were unfortunate rumours about his activity with young people. It was always vague and unspecific," he said, adding that he left it to more senior clergy to deal with.

"I regret that I didn't do more at that stage."

On Tuesday, Pell, who now heads the Vatican Treasury, told the inquiry the crimes of notorious priest Gerald Ridsdale, convicted of more than 100 abuse charges against children, were a sad story but they were "not of much interest" to him at the time, comments that stunned abuse victims.

He denied all knowledge about Ridsdale's abuse and accused the Ballarat bishop at the time, Ronald Mulkearns, of "gross deception" by failing to tell him what was happening.

Australia ordered the Royal Commission in 2012 after a decade of growing pressure to investigate allegations of paedophilia across the country.

It has spoken to almost 5,000 survivors and heard claims of child abuse involving churches, orphanages, community, sports and youth groups and schools.

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