A discussion paper released by the Federal Government also says the commission can suggest new laws as well as policies to make government agencies better able to respond.
It will also be asked to identify roadblocks inside institutions and organisations that prevent proper notification and investigation of claims.
State governments will be asked to hand over information to ensure no individual, institution or organisation "can avoid scrutiny".
The inquiry may also make findings about counselling and support for victims and their families.
The Government says the royal commission, announced last week by Prime Minister Julia Gillard, will not be a police-style investigation but is likely to go further than any inquiry conducted in Australia.
Submissions from the states, churches and any other organisation or person about the terms of reference should be lodged in writing by Monday.
The discussion paper says the commission will not look at sexual abuse within families and urges such abuse be reported to police. The commission will focus on sexual abuse in public and private organisations and institutions.
The Government said victims would be given the chance to "share their experiences" and would help influence recommendations.
But it said "royal commissions are not substitutes for criminal investigations and statements made to a royal commission cannot be used in subsequent court proceedings".
It will be able to refer matters to police.
The Government favours having more than one commissioner to give the inquiry "a diverse range of skills and experience" and said it might have hearings at the same time in different parts of the country.
"The proposed royal commission is likely to go further than any inquiry conducted in Australia before, due to geographic scale and the time period over which the child sexual abuse is reported to have occurred in institutions,'' said the discussion paper.
There is no direct mention of compensation but the discussion paper says there should be no obstacles to people making claims.
The government says it will meet with states, child abuse survivor groups, community, legal and religious organisations in the next two weeks.
It plans to announce the terms of reference and appoint commissioners before the end of the year.
www.dpmc.gov.au 20 Nov 2012
Another feel good story for the masses to swallow, with very little effect.
A majority child abuse occurs in government care. If a government is hold in inquiry into it's own illicit affairs the results will not be accurate.
Another farce in the face of the public.
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