Royal Commissions are reserved for the most serious issues of public importance, which Ardern said was appropriate.
"Any abuse of children is a tragedy, and for those most vulnerable children in state care, it is unconscionable," Ardern said.
State care includes child welfare and youth justice placements, as well as care in health, disability and special education facilities, such as psychiatric hospitals and residential care facilities, residential special schools and health camps.
It does not include prisons, former penal institutions, general hospital admissions or schools, unless the person was in state care at the same time.
"If these people - whether they be children, young people or vulnerable people - were in our care and regardless of where they were placed, they were harmed, then they are in scope," Martin said.
"If a young person was in our care and the state enrolled them into a Catholic boarding school, say, and they were harmed there, they are in scope. If they were in our care and they were on a holiday school camp, and they were harmed at that camp, they are in scope."
Martin defended not including individual compensation in the inquiry's mandate, saying it wasn't about money.
"The purpose is to validate and believe the survivors that tried to tell the state that this was happening, and to use their stories to find the systematic failures and ensure that we have fixed them.
"Whether the state was aware and continued to place young people into situations of danger, whether the state was aware and didn't remove them - that's exactly what this inquiry is about."
Ardern has not bowed to pressure to include non-state institutes, such as church groups, but she said survivors of abuse at the hands of a church were welcome to speak to the inquiry.
"And if they come forward and have connection to the state and have been abused, we have a responsibility to more than listen. We have to act."
Satyanand, who will spend the next three months consulting on the draft terms of reference, would be in charge of how to conduct the hearings to ensure survivors are comfortable.
Asked about the inquiry's focus on Maori, Martin said there was an unconscious bias not only in the system, but "across the whole of our society, and it's something we need to address".
Ardern said she expected a state-wide apology to victims in due course.
Last August, the United Nations recommended independent commission of inquiry into the abuse of children and adults with disabilities while in state care from 1950 to 1990.
The previous Government said there was no need for an inquiry, opting instead for personal apologies and settlement payments.
To contact the Royal Commission, email: royalcommission.statecare@dia.govt.nz
