Wayne Chamley, a researcher with victims' group Broken Rites, alleges The Hospitaller Order of St John of God, which operated two institutions in Victoria from 1952 to 1986, harboured up to 15 pedophiles who subjected orphans, state wards and intellectually disabled boys to sexual and physical abuse.
Two boys may have died as a result of severe beatings, and one of them had been thrown down a staircase, according to witness statements by former inmates received by Broken Rites.
Dr Chamley told a Victorian parliamentary inquiry into clergy sex abuse on Friday that two boys who had been subjected to continual sexual and physical abuse were incarcerated in a mental asylum after they managed to escape the home.
"They speak about being given a red medicine that made them drowsy. Pack rapes took place and boys who resisted or attempted to fight off their attackers were beaten mercilessly," Dr Chamley told the inquiry in his submission. "These were boys of seven to 15 years, up against adult males. This is a story about widespread sexual abuse, severe and unwarranted physical abuse, exploitation and unpaid child labour, starvation of boys, drugging of boys, provision of alcohol to juveniles and situations where intoxicated brothers were in charge of boys."
He said St John of God operated a not-for-profit company which was currently providing accommodation and respite services for the Victorian government, from which it received public funding.
"How can the Victorian government, through the Department of Human Services, be putting up services contracts to an organisation like St John of God, given their record? I suspect there's something going on," Dr Chamley told the inquiry.
He slammed the Salvation Army and Catholic Church, labelling their submissions to the inquiry "safe and convenient" and insulting.
He said it was unbelievable that compensation schemes such as the Melbourne Response, a process adopted by the Catholic Church in which victims of clergy abuse can seek compensation from the church rather than go to police, were allowed.
"I can't believe that it's even allowed to operate," said Dr Chamley. "Under what legal authority can clergymen set up a quasi-legal star chamber of their own?"
Dr Chamley said he had been in mediation sessions where the church's lawyer, Peter O'Callaghan QC, told victims he had the power of a royal commissioner.
"That is his mindset, that he has the powers of a royal commissioner, and these victims believe that."
He said the plan of attack by church lawyers during mediation sessions was to "king-hit the victim and soften him up".
The Family and Community Development Committee are inquiring into child sex abuse within religious and non-government organisations.
On Friday, NSW Premier Barry O'Farrell announced a special commission of inquiry to probe allegations by a senior police investigator into child sex abuse at the hands of Catholic clergy in the NSW Hunter region.