Cardinal George Pell’s role in setting up a Catholic Church compensation scheme for victims of pedophile priests will be scrutinised on Thursday at the child abuse royal commission.

Pell was archbishop of Melbourne in 1996 when the Melbourne archdiocese decided to respond to growing allegations of child sex abuse by its clergy. The church considered creating a legal entity that could be sued by victims, but designed the Melbourne Response compensation scheme instead.

Cardinal Pell told the royal commission earlier this year he believed the church should now create an entity that could be sued.

A Victorian parliamentary inquiry last year recommended the Catholic Church be incorporated so it could be sued.

Melbourne archdiocese lawyer Richard Leder said the church’s position had shifted due to a better understanding of the extent of clergy sexual abuse.

“[It is] the sheer number of victims, but [also] a much greater understanding of the long-term effects of abuse,” Leder told the commission on Wednesday.

Cardinal Pell, now working in the Vatican, will give evidence via video-link from Rome at 4pm on Thursday.