A child abuse victim says she deliberately broke her arm to avoid her attacker at the Bethcar Children's Home in New South Wales.

The Royal Commission into Institutional Responses to Child Sexual Abuse has begun public hearings into the abuse of residents who lived at the home at Brewarrina, in the state's far west, in the 1970s and 80s.

The home relocated to Orange, in the central west, in 1984 and closed in 1989.

The inquiry is scrutinising the State Government's monitoring of operations and response to complaints, including why a compensation claim by 15 former residents took six years to resolve.

Bethcar was a state-funded foster care facility established in the 1970s to house disadvantaged Aboriginal children.

It was run by Burt and Edith Gordon, their adopted daughter referred to as AIT, and AIT's husband Colin Gibson.

In his opening statement, counsel assisting David Lloyd said the commission would hear evidence about the prolonged abuse of Aboriginal children at the home.

One of the victims, Jodie Moore, was close to tears as she gave evidence Burt Gordon and Gibson abused and raped her weekly when she was aged between six and 16.

She said she wet her bed the entire time she was at Bethcar because she was in such fear of Gibson coming into her room at night.

"I also remember when I was eight years old deliberately breaking my arm so I could get a break from the sexual abuse," she said.

She said she repeatedly reported the abuse to Mrs Gordon, welfare authorities and the police, and ran away from the home.

But she and another witness, Kathleen Biles, told the commission they learned not to speak of the abuse after repeated beatings, often by Mrs Gordon.

Ms Biles said Mrs Gordon beat her when she was five years old, after she protested about being abused by Burt Gordon, whom she was made to address as though he were her father.

Ms Biles said Mrs Gordon was sitting in the room as the abuse was occurring.

"Edith flew into a rage," Ms Biles said.

"She got up off the lounge and began beating me wherever she could hit me.

"She said words to the effect 'don't you lie about your father'."

Ms Moore also gave evidence that two welfare officers from the Department of Community Services [DoCS] took her and some other children from Bethcar to the police station, where they gave statements about the abuse.

"Afterwards, [the welfare officer] took us back to Bethcar," she said.

"Burt and Edie flogged us with pepper tree branches."

NSW spent $2 million on compensation fight

The inquiry heard the Gordons were given a state award for their work with children in 1980 - the same year the Government became aware of abuse at the home.

"Mr and Mr Gordon received an award from the NSW Youth And Community Service Minister Rex Jackson as Childcare Parents of the Year," Mr Lloyd said.

He said the Minister's department, now known as the Department of Family and Community Services, became aware of abuse at the home in the same year.

"The evidence is expected to disclose that the Department was aware of problems with sexual abuse at Bethcar at least from early 1980," Mr Lloyd said.

The inquiry heard the NSW Government spent more than $2 million contesting the 15 victims' compensation claim.

"The women settled for $107,000 in damages and an apology," Mr Lloyd said.

"The evidence will disclose that by that time the state's costs were over $930,000 and the former residents' costs, which the state agreed to pay, were approximately $1.24 million."

Mr Lloyd said the commission would investigate whether the Government followed the state's model litigant policy.

Women's Legal Services NSW represented some of the residents.

Executive officer Helen Campbell told the ABC the state's response to the case was unsympathetic and led to many long delays.

"We would like to say in such a future case the Government might take a more compassionate approach," she said.

The victims' compensation claim was brought in 2008 and was resolved this year.

The lawyer representing the State Government, Paul Menzies QC, said the state was re-examining its approach.

"We know that the state can do better when dealing with civil claims to deal with the particular vulnerabilities of child sexual abuse victims," he said.

Mr Lloyd said police decided not to charge Gordon over Ms Biles' complaint, partly because of Gordon's age and ill health, and that he died in 2006.

In 2008, an investigating police officer wrote in a memorandum that Ms Biles' complaints appeared to be legitimate and "there should not be a negative inference taken from the fact that police were unable to prosecute in her specific case".

"Kathleen Biles presented as a person of excellent character and integrity," the memorandum said.

In 2006, Gibson was found guilty of abusing Ms Moore and sentenced to 18 years' prison.

The following year, he was convicted of abusing another another resident and given a 12-year prison sentence.

The inquiry has also heard evidence from the written statements of three other former residents.

The Secretary of the NSW Department of Justice, Andrew Cappie-Wood, and the departmental head of Family and Community Services, Michael Coutts-Trotter, are also expected to appear.