Less than 10 payments have been made to victims of institutional sexual abuse from the 1939 applications made to the National Redress Scheme since it began operating five months ago.
An estimated 60,000 survivors may be eligible to make a claim under the scheme. The majority of the schemes $4 billion fund will be drawn from the institutions where abuse was perpetrated.
But a senate committee hearing into the scheme held in Newcastle on Thursday heard the schemes effectiveness was being frustrated by the large number of institutions which were yet to sign-on.
This has raised further concerns that ill or elderly abuse victims may miss out on receiving redress payments.
Committee member Derryn Hinch highlighted the case of 96-year-old Hunter woman Mary who was abused in a Sydney orphanage. The womans application is still pending because the Sisters of St Joseph were yet to sign-on to the scheme.
Mr Hinch said the committee would look closely at the potential to remove charitable status and tax exemption status from organisations which failed to sign-on.
The committee heard several aspects of the schemes operational matrix appeared to be at odds with the recommendations of the Royal Commission into Institutional Child sexual abuse.
It [the redress scheme] has to be done right. It has to be open-hearted and kind. At the moment it has the dead hand of lawyers and bureaucrats all over it, witness and Newcastle Herald journalist Joanne McCarthy told the inquiry.
These concerns included a requirement that survivors who had served jail sentences of more than five years be subject to a special assessment which will be ultimately determined by the Attorney-General in their home state.
Its a form of double jeopardy. The five year thing has to go, Mr Hinch said.
Concern was also raised about the requirement for survivors to complete statutory declarations as part of their applications.
Sign up for our newsletter to stay up to date.