Bill Green allegedly made the admission to a police officer, days before his 38-year-old wife Veronica disappeared, on February 13, 1976, a coroner has been told.
His wife was last seen by a friend as she dropped her daughter off before school, with Mr Green reporting her missing to police two days later on February 15.
Mr Green was never interviewed by police over his wife's disappearance and died in 2006.
"He should've been spoken to, without a doubt," Detective Sergeant Allan Wood, who reported Ms Green's case to the coroner in 2020, told Melbourne Coroners Court on Wednesday.
"By today's standards that's an obvious omission."
An inquest into Ms Green's disappearance began on Wednesday.
Detective Wood started investigating the matter in 2007 and admitted the initial investigation was "deficient" due to practices in the 1970s.
"The most likely outcome is that Veronica met with foul play," he said.
"I'm confident that should this matter be reported today, the outcome is likely to be very different."
He probed whether Ms Green had left voluntarily and relocated interstate or overseas, but said no proof of life has ever been found.
Detective Wood also investigated whether she took her own life, but said that was unlikely as no remains have been discovered.
He said a woman gave a statement to police in 2007 about alleged sexual abuse at the hands of Mr Green, including an incident at a drive-in cinema while his wife was also inside the car.
The woman alleged Mr Green moved to the back of the car and assaulted her when she was aged 11 or 12.
"Veronica has turned around from the front seat ... began assaulting her, pulling her hair and was yelling at her," the detective said.
He said Mr Green, who was coaching a little athletics club at the time, then allegedly told a police officer named Brian that "Veronica was going to shelve him to the jacks".
"His interpretation was that meant Veronica was going to report him to the police for his conduct with underage girls," Detective Wood said.
"Brian's advice was Bill was likely to be going to prison.
"He articulated to me he believed that conversation took place possibly within days of Veronica's subsequent disappearance."
The young girl was invited by Mr Green to live with him in the days after his wife vanished, Detective Wood alleged.
Police excavated the backyard of the Greens' former Ardeer home in 2020 over suspicions about a swimming pool being installed after Ms Green vanished, but the search yielded nothing of value.
There have been various reported sightings of Ms Green over the decades, including one at a truck stop in Melbourne and another overseas in Malta, but none were confirmed to be her, he said.
Coroner Ingrid Giles hoped her investigation would improve future missing person investigations in Victoria and apologised to Ms Green's family, including daughter Penny who was in court.
Penny said it was "very disappointing" to still not have closure about her mother's disappearance.
"Nothing's changed and ... it won't give us closure because it's too late," she told reporters outside court.
"The people that could have helped, they're all gone now, the people that may have had answers, they're all gone now."
She said there were people overseas and interstate who were "adamant" they had seen her mother and questioned why police did not spend more time on those sightings.
Penny was 14 when her "beautiful mum" disappeared and she grew up believing she had left voluntarily.
She said her father often said he "lost the best woman he ever had in his life" after her mother vanished.
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