Although he did this, he told the commission he did not report the priest, Brother Dominic, to the police, and left it to others to deal with.

He also defended alerting his colleague Brother Michael Hill about two other suspect priests, brother Patrick and brother Romuald, and describing their conduct as unlikely to be “criminal”.

He told the commission he said this because he thought their actions were more “touchy feely” than “penetration or masturbation publicly or anything of that nature”.

Romuald was later jailed and Patrick, although deceased, was accepted by the church as a paedophile.

The Thursday afternoon session of the commission also heard more about bishop Malone’s handling of notorious paedophile Vince Ryan.

Resuming after lunch, Bishop Malone told the commission that once Ryan was arrested, bishop Leo Clarke asked him to take over the running of the case from the church’s perspective.

Bishop Clarke had told him that Ryan had offended many times and that Ryan had been sent to Melbourne for therapy but that no therapy had taken place and that Ryan was returned to the ministry about a year after he left in 1976 without any checks and balances.

Bishop Malone said how much the church had known about Ryan at the time of his arrest was not “an immediate concern” of his because most of his effort had gone into handling the fallout “from a priest’s arrest”.

He said he had been given the name of a Melbourne psychologist, Shane Wall, who had told him his first priority had to be the victims of sexual abuse.

Bishop Malone said Dr Wall told him: “There’s going to be an enormous fallout around the whole diocese with tregard to this matter, but your first priorities must be to the victims.”

Counsel assisting, Stephen Free, took Bishop Malone to a media statement the diocese had put out about Ryan, which said priestly abuse had previously been treated as a “moral problem”.

Soon after, the commission’s chair, Justice Peter McClellan, asked about the phrase “moral problem”, asking whether the anal penetration of a 10-year-old boy had previously been thought of as “a moral problem”.

“I would think not, but . . .” bishop Malone said.

Asked how paedophilia could ever be seen as a moral problem rather than a criminal act, bishop Malone said the church was “a bit of a strange beast” that had operated its structures outside of wider society so that “civil law somehow was not seen as impinging on the life of the church, in the past”.

He said the church had changed since then, giving the second Vatican Council as an example.

When Justice McClellan asked him if there had been “a retreat” among the clergy from Vatican II, bishop Malone said it might be the case with some conservative people but the majority “would see the value of it”.

Questioned again by Mr Free, he was asked about the steps he took in 1996 to get to the bottom of what had happened with Ryan in 1975.

He did not recall talking to Sister Evelyn Woodward about Ryan but she was someone he relied on as a psychologist and as someone who had “knowledge in the dealings with these sorts of issues”.

He said he spoke with bishop Clarke but “as I mentioned earlier, he didn’t reveal a great deal”.

Justice McClellan then asked bishop Malone about a second 1996 media statement that contained a timeline detailing the church’s response to abuse by clergy.

Justice McClellan said the church knew a lot more than it had revealed in that document, to which bishop Malone said: “Yes.”

The chair: “And you didn’t tell the public that you knew that.”

Bishop Malone: “I didn’t tell them, no.”

He was also shown the transcript of a radio interview he gave in 1996 in which he admitted that: “In retrospect, with the knowledge we have now, no we didn’t act with integrity.”

Justice McClellan asked if bishop Malone now accepted there had been a cover up  but the bishop said that wasn’t a word he would use.

Asked again, he said there had been a sense of needing to look after the church but after more priests were charged during his time he said he had an epiphany and that he could no longer sit on the fence.

“You either had to try to defend the church or you had to try to serve the needs of survivors and I chose the latter, so . . . ,” bishop Malone said.

Questioned again by Mr Free, he said he understood by mid-1996 that there was a deep sense of concern in the community that things had been covered up in the past.

He agreed he did not get to the bottom of what church figures including Monsignor Patrick Cotter and bishop Clarke – who were there in the 1970s – knew about Ryan.

“Look, yes, but I’m very fresh in the job by this time and I’m just sort of running by the seat of my pants,” bishop Malone said.

Asked if he wished he’d done more, he said: “Definitely. I often wish I had been more decisive and more aware of a forward plan than I was.”

Bishop Malone was then taken to an independent report commissioned after Ryan’s arrest that said although the church had stood Ryan down in 1976 and sent him for treatment, “the fact that there was no followup up, whilst regrettable, could well by explained by lack of understanding of paedophilia and the change in diocesan leadership during the period Ryan was in Melbourne”.

He was also asked about a statement of his from 1997, in which he had described Ryan’s crimes as “misdemeanors”.

That statement also said that: “It was not until 1995 that a tragic scenario of sexual abuse emerged.”

Questioned by Justice McClellan he agreed that this was incorrect, because church leaders had known back in the 1970s.

Justice McClellan: “And to say, as you have done, it was not until 1995 that a tragic scenario of sexual abuse emerged, that’s not right, is it?”

Bishop Malone: “Well, it’s not right. I know I can speak personally, I didn’t know anything about it until later in 1995.”

He was then taken to some letters he had written in response to the Newcastle Herald’s coverage of the Ryan matter, in which he criticised journalist Jeff Corbett for accusing the church of a cover-up.

Questioned repeatedly by Justice McClellan he eventually accepted that there had been a cover-up.

Where bishop Ryan had written: “For Mr Corbett to accuse church authorities of covering up is both incorrect and a slur on the integrity of those authorities.”

Justice McClellan said: “That statement by you is not correct, is it?”

He said: “No, it is not correct, your honour.”

Bishop Malone was also forced to concede that church officials had known what was happening with Ryan in 1975 and that to tell parishioners otherwise was “not true”.

Taken to a 2007 letter from a parish priest, Maurice Cahill, bishop Malone said he had “a sense” that bishop Clarke had known more about Ryan than he had let on.

Bishop Malone defended not defrocking Ryan because to do so would have simply “released a paedophile into . . . the midst of the community”.

Justice McClellan said the church still could have laicised or defrocked Ryan, but bishop Malone said if they did that, the church would have no further call on him.

Commissioner Andrew Murray asked bishop Malone whether he was concerned that some people might think the church was giving Ryan a “safe haven”.

He said some people “still think that, yes” and it was a dilemma whether to “keep him in or cut him loose”.

Ryan has not been defrocked but he is not allowed to act as a priest and has a range of conditions on him. He came of jail in 2010 but was sentenced again last month for the assault of a boy he had previously “forgotten” about.