A Salvation Army officer who admitted to sexually abusing an eight-year-old girl was allowed to return to the organisation and rise through the ranks, the royal commission has heard.

Colin Haggar is accused of indecently assaulting the girl, who was the daughter of a Salvation Army op shop worker, in his office in Bathurst in 1989.

Counsel assisting the commission Simeon Beckett said the evidence would show Mr Haggar told the girl's mother and her husband, ''It wasn't that serious, I only fingered her'' and senior Salvation Army officers advised the family not to go to the police or the media.

In his opening address to the second public hearing into the Salvation Army's response to child sexual abuse, Mr Beckett said Mr Haggar was forced to retire and demoted from lieutenant colonel to major in October last year.

The Commission also heard the Salvation Army took a ''largely litigious approach'' towards victims of physical and sexual abuse, especially those who sought compensation. A ''matrix'' was developed in 2005 to calculate the amounts to be offered to victims based on the age of the child at the time of the abuse, the length of time they spent in Salvation Army-run homes, the kind of abuse suffered and the impact it had on their lives.

The hearing continues.