One of Pope Francis's top advisers told an Australian inquiry into child sex abuse on Tuesday that an Australian bishop had deceived him about the reason a pedophile priest was repeatedly transferred from parish to parish.

Australian Cardinal George Pell was a priest in the town of Ballarat in 1970s who advised Bishop Ronald Mulkearns about the placement of priests within the diocese.

Pell, now the pope's top financial adviser, told the Royal Commission into Institutional Responses to Child Sexual Abuse that while Mulkearns and another priest at the regular committee meetings, Monsignor Leo Fiscalini, both knew about serious sexual assault allegations against notorious pedophile Gerald Ridsdale, neither mentioned them.

"It probably would be possible to imagine a greater deception, but it's a gross deception," Pell told the Sydney inquiry via videolink from a Rome hotel.

It was the second day of evidence for the 74-year-old cleric, who because of ill health could not travel to Australia to give evidence in person at the inquiry into decades of child abuse.

Two dozen Australian abuse survivors and their companions traveled across the globe to witness Pell's testimony in a hotel conference room, a significant show of accountability in the church's long-running abuse saga.

Pell said he suspected Mulkearns concealed the allegations against Ridsdale because the bishop didn't want to share culpability with Pell for allowing Ridsdale to continue abusing children.

"He might have wanted to protect us from his wrong doing," Pell said. "He might have feared that, if he told us the truth, that people like myself would have said: `Well, look, is that correct? I am not sure we should be going in that direction at all."'

Pell said he could not recall if he had asked the bishop why Risdale was transferred with "somewhat unusual" frequency.

"Obviously there were a series of difficulties, but it certainly was not stated that those difficulties touched on pedophilia and crimes," Pell said.

Pell said priests didn't discuss with him the allegations against Ridsdale, even though they were common knowledge in the towns of Apollo Bay and Inglewood where Ridsdale had been the parish priest.

Pell's testimony was interrupted by jeers from the public gallery as he explained the moral framework in which priests live.

"We work within a framework of Christian moral teaching, or certainly we should, and discussion of the secret faults of others is not encouraged," Pell said.

Pell said he had not known the sexual abuse was common knowledge in Inglewood.

"I didn't know whether it was common knowledge or whether it wasn't. It's a sad story and it wasn't of much interest to me," Pell said, bringing audible gasps and jeers from the public gallery.

"The suffering, of course, was real and I very much regret that, but I had no reason to turn my mind to the extent of the evils that Ridsdale had perpetrated," he added.

Pell rejected an accusation made by the lead counsel assisting the commission, Gail Furness, that his answers were designed to remove his own responsibility for Ridsdale's crimes.

"My answers were designed to answer your questions accurately and completely," Pell said.

Ridsdale's nephew David Ridsdale, who was raped by his uncle, said outside the Rome hotel he did not believe that Pell had been unaware of the pedophile allegations.

"It beggars belief that he could have said he wasn't interested in hearing about the crimes of my uncle," Ridsdale told reporters.

Before Pell's testimony on Tuesday, he told reporters: "I've got the full backing of the pope."

The Vatican said a private audience Pell had with the pope on Monday was a long-scheduled appointment related to Pell's duties as Holy See finance minister, and had nothing to do with the abuse hearings.