A part of New Zealand's history is being compared to the stolen generations of Australia.

The Confidential Listening and Assistance Service panel has recommended an independent inquiry into the abuse of children in state care in the 1950s to 1990s.

It heard from more than 1200 people, but Social Development Minister Anne Tolley has ruled out launching such an inquiry to find out if there are more, stating that it wasn't a systemic issue.

But psychology and public health professor Max Abbott said he believes it was an endemic in those years.

Professor Abbott said it's likely many won't have come forward, and the full extent is not yet known.

He said it's now a serious issue that looms over New Zealand's history.

"I believe that this is a contributing factor in terms of ongoing problems with incarceration and social disadvantage in this country.

So it's actually a very, very serious issue that has got to come out into the open."

He said an inquiry independent from government might give some people the courage to come forward.

On the other hand, he commended Minister Tolley for changing her mind about whether or not a body should be set up to handle complaints of abuse of children within state services.

She announced yesterday a unit, also recommended by the CLAS panel, could be handled through the planned Ministry for Vulnerable Children.

Professor Abbott said it would be a commendable move and he's happy she seems to have changed her mind.

"I'm very pleased to see that, I think good on her, she'd taken a different view and I think it's a really good thing that she's prepared to review that."

But he had some residual concerns that the body might not be independent enough from social services, the very services that have caused some of the abuse.

The Prime Minister says he can't understand why Judge Carolyn Henwood's lost faith in the way the Government's dealt with historic child abuse claims.

Ms Tolley said about 3.5 per cent of children placed in state care had made claims around abuse, which Judge Henwood saw as the Government trying to sweep it to one side and treat it as a minor thing when the opposite is true.

John Key says that's not the case when 75 to 80 per cent of people are completing their claims and they say they're satisfied with the process they're going through.

He said it's a little difficult to see why Judge Henwood's lost faith in a system that in practice is working.

Judge Henwood heard from 1100 people who'd been abused in state care during an inquiry.