The Federal Government has tabled a bill that would entitle victims of child sexual abuse in Commonwealth and Territory institutions up to $150,000 in compensation, but it excludes victims who have served time in jail.
Social Services Minister Christian Porter said the response of institutions to claims of child abuse were "inadequate".
"No child should ever experience what we know occurred," he told the House of Representatives.
"The establishment of this scheme is an acknowledgment that sexual abuse suffered by children in institutions operated by a number of governments was wrong, a shocking betrayal of trust and simply should never have happened."
Mr Porter said the Royal Commission into Institutional Responses to Child Sexual Abuse had estimated there were 4,000 institutions across Australia where child sexual abuse happened.
- 2,000 were Catholic institutions
- 500 were run by the Anglican Church
- 250 were run by the Salvation Army
He said 20,000 victims were estimated to have been abused in government-run institutions and 40,000 in non-government facilities.
Criminals excluded from compensation
The bill excludes anyone convicted of sex offences, or sentenced to prison terms of five years or more for crimes such as serious drug, homicide or fraud offences.
Social Services Minister Christian Porter said it was an agonising decision to exclude sexual abuse survivors, but the Government had to set boundaries.
"No-one disputes what the royal commission said, which is that many times people who were the victims and survivors of abuse as a child can often go on, because of those terrible circumstances, to themselves commit wrongs in their life but a view was taken and it was not an easy decision to make," he said.
He said the Government had taken "deep consultations" with the attorneys-general for each of the jurisdictions involved before making the decision to exclude those victims.
"A view, which was almost unanimous in my recollection, was put that to give integrity and public confidence to the scheme, there had to be some limitations," Mr Porter said.
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