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Bishop Dunn said medical professionals had failed to adequately understand the "recidivist nature'' of paedophilia at the time.
"It just goes on and on,'' he said.
So, with the benefit of hindsight, the Church got the handling of Fr Murray wrong?
"Yes, with the benefit of hindsight, absolutely. In capital letters.''
But he still defended Bishop John Kavanagh, saying he acted "very appropriately in a way'' by removing Fr Murray, sending him for treatment and not allowing him to return to Dunedin.
Asked if Bishop Kavanagh bore some responsibility for allowing Fr Murray to continue as a parish priest, exposing others to risk, Bishop Dunn said that was "trying to put 21st century heads on people in the 1970s or 80s''.
It appeared he was motivated by trying to address Fr Murray's problems, and stop the offending, although it did not work.
"No, it didn't work. We can say that with hindsight.''
He also worried a different approach might only have served to drive paedophile priests like Fr Murray underground.
"I'm not quite sure what makes for a safer society.''
The Church had changed since Fr Murray's offending - but so, too, had society, Bishop Dunn believed.
"I find it extraordinary that parents didn't go straight to the police in the 1970s and 80s.
"I think now parents would be much more alert, and I personally would be.''
But there was still room for improvement, he believed.
"I like to think our society is becoming safer, but you'd be foolish to think this sort of thing isn't going on still in society, sadly.''
However, that did not include defrocking Fr Murray, who, now aged 91, remains a priest in retirement in an Auckland rest home.
Defrocking him now could "possibly'' send a powerful signal to victims, but would also amount to the Church "washing our hands of him and saying 'well, he's out'''.
"I know that's what they want, and I hear all that they're saying, but I think it's also got quite an unattractive flip-side to me.
"Is there some responsibility on the Church . . . to actually, if you like, keep our grips on him and keep him corralled?''
In the meantime, the Catholic Church in New Zealand, like everyone else, was still waiting to see what the Government would decide about the scope of the Royal Commission into historic abuse.
But the Church was ready to "cooperate as fully as possible'', whatever was decided, he said.
"I think it will just create a climate and society where people will feel empowered to speak up and say 'this must never happen again'.''