The Vatican's holy warrior

George Pell's parish was the big end of town. He let Melbourne know the church was not afraid of power. He exercised his own with a freedom unimaginable to a politician. He didn't need to win hearts or votes. He had no board to please or party to keep onside. He answered only to Rome. He was the prince of Catholic Melbourne.

Despite protests from historians, he shifted a century-old statue of Daniel O'Connell from the forecourt of St Patrick's Cathedral and put in its place an immense bronze of Daniel Mannix. Cost: $100,000. He built a mini-Vatican around the cathedral to house new church offices, a seminary, a campus for the Australian Catholic University and the headquarters of the John Paul II Institute for Marriage and Family. Cost: $30 million. He was always a big spender. Pell brought a climate of fear to Melbourne. As books were banned, jobs lost and careers blocked, his critics became cautious. More and more they spoke to the press off the record. Pell could swat such anonymous criticism away effortlessly. He had an agenda and he got his way. If he didn't, he could become incandescent with rage.

Pell has a fundamental faith that sexuality is malleable, that spiritual exercises can stop sex in its tracks or even change its direction. This is the ground on which he has built his commitment to celibacy, his intolerance of homosexuality, his insistence that the sex rules of Rome be obeyed and his belief (certainly at that time) that even paedophiles can be redeemed by grace and with skilled psychological assistance.

Intransigence made Pell a celebrity. Standing up to the zeitgeist, demanding obedience, listing sins and condemning sinners kept him in the news. Soon after becoming archbishop, he engaged the crisis manager Royce Communications and its CEO, Peter Mahon.

Royce was there for the Melbourne Response, on hand for Rainbow Sash (the campaign for non-heterosexual Catholics to receive holy communion), and guided Pell during his quixotic campaign to have Andres Serrano's Piss Christ - a vermilion and gold photograph of a crucifix bathed in urine - removed from the walls of the National Gallery of Victoria. Royce helped the church navigate the reefs and shoals of the child abuse scandal as more victims went to the media and more paedophile priests went to prison. And if euthanasia or violence on television was the subject of the day, Pell was there with a crisp, dogmatic grab.

Drug-taking? "Wrong and sinful." Original sin? "Alive and flourishing." Universal innocence? "A dangerous myth." IVF for single mothers? "We are on the verge of creating a whole new generation of stolen children." That created a most satisfying uproar.

Every five years, the bishops of Australia travel in state to confer with the Vatican. At their Ad Limina meeting in 1998, Geoffrey Robinson tried to focus attention on clerical sex abuse. But there was no appetite for that in the Holy City. Pat Power, another of the bishops present, told me: "They still hadn't got it in Rome."

Instead, the bishops were ambushed and compelled to sign a statement that blamed "the tolerance characteristic of Australian society" for encouraging Catholics on this side of the world to become indifferent to truth. The Statement of Conclusions went into the problems in Australia in detail. On the Vatican's list were "a decline in the sense of sin", "the legitimation of homosexual relationships" and "an extreme individualism, seen especially in a concept of conscience that elevates the individual conscience to the level of an absolute".

These might have been Pell's words. And there was not a line in that bulky document about clerical sex abuse.

Pell was learning to use Rome to get his way in Australia. Heroin addicts were dying in the streets of Sydney and Melbourne, and the Sisters of Charity, who run St Vincent's hospital in Sydney, were preparing to open Australia's first medically supervised injecting room. Politicians and the church were working hand in glove. Then the Congregation for the Doctrine of the Faith issued orders in October 1999 forbidding the sisters from going ahead. Pell was in Rome for these deliberations.

John Howard welcomed the veto. The two men had come to matter a great deal to each other. Pell's oldest political loyalties were to the DLP, but when the party collapsed, B A Santamaria had directed his followers to cross the bridge to the Liberals. It was not altogether comfortable for either party, so it mattered a great deal for Santamaria's people when Howard reconciled with the old man at the very end.

Howard ordered a state funeral for Santamaria. Pell did the honours. In his fine eulogy, Pell pledged himself all over again to the cause pursued by this "maddeningly" pessimistic and implacable figure who had been "the most influential Catholic voice in Australia".

Despite their alliance there were always little differences between the archbishop and the prime minister. Pell condemned the "growing gulf between rich and poor". He chided Howard for trying to curtail native-title rights. He blamed the appearance of One Nation on the "drastic consequences of globalisation". And he was a determined opponent of the monarchy. His fellow bishops had decided rather cautiously not to adopt a single Catholic position on the republic, but Pell powered ahead. The republican campaign helped make the archbishop of Melbourne a national figure. And it reminded the bishops once more that he was his own man.

They had called on the prime minister in 1998 not to include "the essentials of life" in his planned goods and services tax. As the elections of that year approached, Howard had ranged against him on the GST, the Labor opposition, the left of his own party and most of the churches. Supporting the bishops were institutions Pell always suspected of left-wing sympathies: St Vincent de Paul and the Catholic Social Welfare Commission. As Howard's hopes of re-election began to fade, he and his ministers lashed out at the churches. Then Pell intervened. Through Royce Communications, he put out a statement: "There is no one Catholic position on an issue as complex as taxation." Those thirteen words were a godsend for Howard. He used Pell's name all the way to polling day. "He's not taking sides," he said. "He's speaking common sense and he's saying the obvious thing. Let the individual Australian make up his or her mind as to whether this is good for their country ..." Howard scraped home. The bishops were furious. Pell had done more than break ranks this time: he had silenced them. Australians were treating this unlikely, Roman figure as the voice of the Catholic Church. Pell was unmoved. He didn't need these men. He answered elsewhere.

Pell loved Melbourne. It was his stage: the biggest and richest archdiocese in the nation. He knew the politicians and the politics of the city intimately. He was a member of the Melbourne Club. He ran a magnificent cathedral. Out in the parishes attendance at mass continued to sag but Pell's faith in renewal through doctrinal purity was unshaken. One day the pruned tree would grow abundantly.

Measured in every other way but turning up on Sunday, the Catholic Church was growing. Catholic schools were teaching more children and Catholic hospitals treating more patients than ever. Pell could take a great deal of the credit for the establishment of the Australian Catholic University. A remarkable achievement: sectarian higher education funded in the late 20th century with public money. He had done all this as archbishop of Melbourne.

On 26 March, 2001 Rome announced his translation to Sydney. In the tide of commentary that washed him north, little was said about his handling of paedophilia in church ranks. It was not yet - not quite yet - seen as a big issue in his career.

The work of the Melbourne Response ground on. Pell told The Sunday Age after its first year: "We have dealt with most of the backlog." He was completely mistaken. Victims were still queuing at commissioner Peter O'Callaghan's door and would continue to turn up long after Pell left the city.

By June 2012 O'Callaghan had accepted as proven complaints from 304 men and women of abuse by about 60 priests over 80 years. About half those victims would tell the Victorian inquiry that they were highly dissatisfied with the process. So were the police, who accused O'Callaghan of referring not a single complaint to them. O'Callaghan was outraged by this. He insisted he had made every effort to encourage victims to go to the police, but documents he produced to the inquiry suggest only about 10 victims went to the police after first seeing him.

There were victims who found the processes of the Melbourne Response gruelling; victims furious that they had to pay their own legal bills; victims who found it painful to face their abusers. And there were complaints from victim after victim about the sums they were paid at the end of the process, sums they had to accept because the alternative was the almost impossible task of suing the church.

Pell was unfazed earlier this year when he faced the inquiry and one of the parliamentarians read him the testimony of an angry victim: "Any Australian citizen can go to a court. This is what Australia is about. It is a democratic country. I need to go there to get proper democracy. That is what I want ... I got 27 grand for being bloody raped 10 times, apart from all that sort of trying suicide - the whole works." Pell conceded the compensation offer was "miserable" but defended the system that effectively locks victims out of the courts.

His mantra was: "We have always complied with the law of the land, and we will comply with the law of the land in the future."

The $50,000 cap on compensation does not trouble him. He told the inquiry: "I have acted compatibly with the general standards of the community and I have tried to be generous."

The cap had been raised by 2009 to $75,000 but that modest maximum seems to have been paid rarely. The maths was laid before the inquiry: the Melbourne Response has paid 287 victims a total of $9,319,750. The average payout is risible: about $32,500.

What the victims might have won if the courts were open to them can only be guessed at: perhaps 10 times as much, perhaps more. Last year The Economist did the sums for America, where the church doesn't enjoy protection from litigation: "Sexual abuse cases typically cost the church over $1 million per victim."

One family, the Fosters, decided to sue rather than accept the $50,000 offered to their daughter Emma for her repeated rape by Father Kevin O'Donnell. The toll on them had already been appalling. Now they were made to fight every inch of the way. Despite O'Donnell's confessions and prison sentence; despite admissions to the Fosters by the Melbourne Response; despite the written apology they had received from Pell, the church now denied any "physical and/or sexual and/or psychological abuse" by the priest.

Their lawyers compelled the church to produce documents that showed the archdiocese had known about O'Donnell's crimes for more than 40 years. That didn't take the Fosters over the ramparts but they had crossed the moat. Rather than risk a trial that might bring down the walls, the archdiocese of Melbourne settled for $750,000 plus costs after a nine-year battle.

"I still don't understand," Chrissie Foster wrote, "why we were made to fight so long and hard."

One day another statue may appear in the forecourt of St Patrick's Cathedral somewhere near the mighty figure of Daniel Mannix.

The rhetoric on the plinth would be difficult to draft, but the message would be that George Pell, archbishop of Melbourne, 1996 to 2001, saved his church a lot of money.

This is an edited extract from Quarterly Essay 51, The Prince: Faith, Abuse and George Pell by David Marr, available on Monday 23 September.