Cardinal George Pell was overheard in the 1980s discussing the sexual abuse of boys at the hands of convicted paedophile Gerald Ridsdale, a royal commission has been told.

The explosive allegations about what Australia's most senior Catholic knew of abuse by priests in the Ballarat diocese before he became the Archbishop of Melbourne were aired at the Royal Commission into Institutional Responses to Child Sexual Abuse.

A man, referred to as BWE during the hearing, told the inquiry he overhead a conversation between Father Frank Madden and then-auxiliary priest George Pell at St Patricks Cathedral in 1983.

He said Father Madden asked: "How are things going down your way?"

He said Cardinal Pell replied: "I think Gerry has been rooting young boys again."

The alleged reference was to Ridsdale, who served as a priest in Ballarat.

"This remark shocked me to the core. It rattled me. Because of everything I'd been told by my brothers about Gerald Ridsdale," BWE told the inquiry.

He said the next year he told his mother.

"I told her that I more or less overheard George Pell confirm that Gerald Ridsdale was still having sex with young boys," he said.

"She said to me, 'don't be ridiculous'."

BWE said Cardinal Pell was an imposing figure and he had always thought the priest would become pope.

When questioning BWE, Cardinal Pell's lawyer Sam Duggan said his client would not use such coarse language.

"That has never been language that Father Pell has ever used," he said.

"It's simply something he would not say."

Mr Duggan said by 1982 Ridsdale had moved to New South Wales, so the statement made no sense.

He told the inquiry Ridsdale had not been in the Ballarat diocese for more than a decade when the conversation was alleged to have taken place.

Pell's lawyer grills victims over cover-up accusations

Mr Duggan also quizzed two victims over allegations Australia's top Catholic offered a bribe and turned a blind eye to claims of abuse.

Cardinal Pell, is due to give evidence at the hearing next week.

On Monday Mr Duggan cross-examined abuse victim David Ridsdale over his allegations the Cardinal tried to bribe him to stay quiet about abuse he suffered at the hands of his uncle, Gerald Ridsdale.

Mr Ridsdale has previously said he called then Bishop Pell in 1993 and told him about the abuse.

Abuse in the Ballarat Archdiocese Abuse claims made by 140 people in past 35 years

Abuse claims made by 140 people in past 35 years Abuse occurred between 1950 and 1989 in 95pc of claims

Abuse occurred between 1950 and 1989 in 95pc of claims 86 claims resulted in compensation payouts

86 claims resulted in compensation payouts $5m in compensation paid out including treatment and legal costs

$5m in compensation paid out including treatment and legal costs Average payment $54,000 per claimant

Average payment $54,000 per claimant 90pc of all claims were made against seven priests Source: Royal Commission

Under questioning, Mr Duggan put to Mr Ridsdale that the conversation never happened.

"I suggest to you George Pell never said 'I want to know what it will take to keep you quiet' ... this conversation never happened," he said.

"That is as clear to me as the first time my uncle forced me [into sexual activities]," Mr Ridsdale replied.

"These are things that stick, they changed my life."

Cardinal Pell has rejected Mr Ridsdale's allegations under oath and publicly on several occasions.

On the stand, Mr Ridsdale was questioned about possible communication breakdowns in the conversation.

"George Pell has never taken the opportunity to correct that, contact me or do anything of any nature", Mr Ridsdale answered.

"It has always been the end of the phone call. It changed my life, I rang the police."

Mr Duggan argued it did not make sense for the then-Bishop to offer a bribe as the police were already investigating Gerald Ridsdale.

'Don't be so ridiculous,' Pell responded to victim

A second abuse victim, Timothy Green, was also challenged over his assertions Cardinal Pell was dismissive when he reported that Brother Edward Dowlan was abusing boys at St Patrick's College in Ballarat in the 1970s.

Dowlan changed his name in the 1990s to Ted Bales to avoid publicity after first being jailed for child sex offences.

Convicted paedophile and former Christian Brother Ted Bales.

Mr Green, who was 12 at the time, said he just blurted it out to Pell at a swimming pool changing room and he walked away.

Mr Duggan said it was possible Cardinal Pell did not hear him.

"No, he answered me," Mr Green replied.

"He said, 'don't be so ridiculous'."

The retired Bishop of Ballarat, Ronald Mulkearns, was expected to give evidence at the inquiry but has been excused due to ill health.

He is in palliative care but could be called in future if his health improves.

"Bishop Mulkearns remains subject to a summons and should his health improve sufficiently the royal commission intends to call him to give evidence in public," Counsel Assisting Gail Furness SC told the commission.

The focus on Bishop Mulkearns will be his response to abuse allegations against Monsignor John Day, Father Paul Ryan, Father Gerald Ridsdale and an unnamed priest, and whether he covered up the abuse.