"It is reported to us that when it occurs in residential institutions, sexual abuse is almost always accompanied by almost unbelievable levels of physical violence inflicted on the children by the adults who have responsibility for their welfare," commission chairman Justice Peter McClelland said.
The commission was established by former Prime Minister Julia Gillard after rising outrage at allegations of child abuse by institutions ranging from churches and youth organisations to government agencies.
It follows state inquiries in Victoria and New South Wales, which heard horrific stories of sexual and physical abuse of young children, including allegations of rape and torture.
The royal commission is focusing on the way institutions dealt with reports of abuse, embracing allegations of widespread coverups.
The initial Sydney hearing centres on Steven Larkins, a former Scoutmaster and chief executive of a foster care organisation for indigenous children, who had also advised government agencies.
Larkins was jailed last year for offences including the aggravated indecent assault of two children aged 11 and 12, possession of child pornography and attempts to hide his offending.
The commission will examine his associations with Scouts Australia, Hunter Aboriginal Children's Services, of which he was chief executive, the Commission for Children and Young People, and the NSW police.
The responses of other state agencies and organisations will also be probed.
The commission intends calling Armand Hoitink, a former Scout leader who exposed Larkins, the NSW Family and Community Services' head of community services, Maree Walk, and the acting commissioner for children and young people, Kerryn Boland.
Senior counsel assisting the commission, Gail Furness, told the hearing yesterday that Larkins was a case study that would provide insights into how and why he was able to continue in senior positions of trust despite doubts extending over two decades.
Furness told the commission that police had also investigated but not pursued a mother's report of abuse of her child by Larkins in 1997.
She said that the Community Services Department had not checked Larkins' suitability to become a principal officer at the foster care agency.
And she said that Larkins had evaded scrutiny for a decade, sometimes by falsifying documents.
In separate developments, five men have launched legal action against the Catholic Missionaries of the Sacred Heart.
They are alleging abuse by a priest when they were boarders at its Chevalier College in Sydney.
And the NSW Family and Community Services Department is investigating 500 foster carers for inappropriate behaviour.
