A new, independent system will be developed to address the horrific scale of abuse in faith-based and state institutions.
And the Abuse in Care Royal Commission said institutions where people were abused should join and partly fund the new scheme - whether they want to or not.
Memorials to abuse survivors and more effective ways to prosecute abusers have also been suggested.
The commission today said society, the state and churches were for years unwilling or unable to accept how widespread abuse was.
"The scale of the abuse was simply too horrific to acknowledge, the financial ramifications too huge to contemplate," the commission said in its new report.
"So they told themselves these cases were not symptomatic of any wider problem."
Minister for the Public Service Chris Hipkins and Minister of Internal Affairs Jan Tinetti announced the new redress system, simultaneous with the commission report's release.
"I'm not going to put a price tag on it. It will cost what it costs," Hipkins said today. "It's clear that previous attempts to provide redress have fallen short."
He said the Government would begin work on the new scheme, before the royal commission finishes its other investigations, to minimise delays for survivors waiting for claims to be resolved.
"It has taken far too long to get to this point. This is a national disgrace...That is something the whole country should be sorry for."
He said survivors found an adversarial, legalistic approach to redress had not worked, and a cohesive independent new system was needed.
"We don't expect people to have to lawyer up for it."
The commission highlighted areas where urgent action was needed before a new system was in place, such as advance payments for older or terminally-ill survivors.
Redress has been broadly described as justice, but can include concepts around apologies, ongoing support and appropriate compensation for harm done.
The commissioners chose to use the reo Māori terms "puretumu torowhānui", or holistic redress, referring to things which can restore the wellbeing and mana of survivors.
The royal commission report, titled "From Redress to Puretumu Torowhānui", said abuse happened in hospitals, boarding schools, orphanages, churches, foster and other care homes, and homes for unmarried mothers.
And the Crown spent too much time using aggressive tactics or hiding behind technical defences to defeat abuse survivors in court, the commissioners added. These tactics, aimed at discouraging more lawsuits, compelled many survivors to abandon battles for justice.
Among 95 recommendations, the commission encouraged faith-based institutions to join the new scheme - and said if necessary, they should be required to join.
The royal commission said after a "reasonable time", suggested as four to six months, the Crown could consider terminating contracts or revoking the charitable status of entities refusing to join.
Last month, survivors' activist Dr Murray Heasley said a new, independent authority where complaints could be investigated might do a better job than the royal commission.
"The institution can be investigated and the authority can recommend charges."
Heasley today said the Network of Survivors of Abuse in Faith-based Institutions and Their Supporters broadly welcomed the report, and now the Government had to act.
"We've got survivors in deeply difficult circumstances. They need help now."
He said survivors needed an independent entity to help them get through the next few years.
Today's new report said a disproportionate number of abuse in care victims were Māori.
This was partly due to generations of monocultural and racist government policies and harsh sentencing from children's courts, the report added.
"Many of those in care came from already disadvantaged or marginalised parts of the community," the new report added.
"Deaf and disabled survivors and those with mental illness were systematically separated from society and placed out of sight in institutions or other full-time care settings, a result of ableist policies and beliefs."
Much of the abuse was criminal, and some was torture.
Women and girls endured rape and forced examinations for sexually transmitted diseases and removal of their babies.
"It is incomprehensible that human beings could behave like this towards another," the commissioners added.
"What is just as baffling is how those in authority failed in their responses to survivors' requests for redress."
The commissioners said multiple public agencies and churches failed for years to properly address abuse and frequently did nothing to hold abusers to account.
The commission said Oranga Tamariki and the ministries of Social Development, Health and Education, the Salvation Army and Catholic and Anglican churches had let abuse survivors down.
Agencies often investigated themselves and offered only token forms of redress, often too late.
Many of the so-called investigations lacked in cultural nuance or sensitivity, and survivors were often not believed, the commissioners added.
To ensure the fairness of puretumu torowhānui, the commissioners also called for an exception to accident compensation legislation.
As the Herald reported last month, up to 2000 people including abuse survivors could be victims of a compensation loophole an Auckland man helped expose.
The royal commission said accident compensation legislation was also used by a Marist Brothers' lawyer to avoid making a payout to a woman who was abused.
The Crown had also used that legislation to avoid payouts in a Lake Alice abuse case in the late 1990s.
"The Crown seemed to show willingness to resolve the claims in this way, but in reality, it was focused on defending itself against liability for what had happened to claimants," the commission said.
The commissioners said the 95 recommendations were based on work including 15 weeks of public hearings, hundreds of private meetings, and analysis of more than 150,000 documents.
The report's first part runs to more than 400 pages. The commission also released a volume of case studies.
"Spanning decades, survivors' claims and attempts to obtain redress have been rejected, or their experiences were downplayed," commission chair Judge Coral Shaw said.
"Many were not believed and dismissed. Genuine and personal apologies to survivors are needed."
Hipkins and Tinetti said Cabinet aimed to make final decisions about the new system by about mid-2023, with the new system to be introduced soon after that.
* The puretumu torowhānui must be consistent with international law, give effect to te Tiriti o Waitangi, and be independent of the state and faith-based institutions.
* The new system must also help prevent abuse in care.
* State and faith-based institutions should phase out current claims processes for abuse in care.
* Faith-based institutions or indirect state care providers should direct survivors to the new scheme and give them information about it.
* The scheme should cover physical, sexual, emotional, psychological, racial and
cultural abuse, along with neglect.
* An institution should, if a survivor wishes, give an apology as part of a culturally-based or other restorative process.
* Survivors should be able to make a claim to both puretumu torowhānui and ACC.
* The scheme should make decisions that are fair, equitable, predictable, timely, transparent and consistent from survivor to survivor and from year to year.