Councillor Hamilton yesterday told the NSW Government public inquiry into Shellharbour City Council that his ALP caucus ignored the recommendation from staff and independent consultants out of fear the company would increase the price further down the track.

"There was a feeling among councillors that they were trying to grab a monopoly of waste within the state," Cr Hamilton said.

"Our inquiries found they had done this on a number of occasions. We were frightened our residents would end up paying more."

Graham Standen, the council's customer and environmental group manager, told the inquiry this week that the councillors' December decision would add an extra $1.9 million to the waste bill over a six-year contract.

The eight Labor councillors have all been asked at the inquiry if they knew the company they chose was a state ALP donor.

The Mayor raised the issue of unscrupulous waste contract pricing after being questioned at length about his understanding of councillors' role in the tender process and his reasons for not following the tender evaluation panel recommendation.

Echoing his ALP colleagues, Cr Hamilton cited social concerns as a major sticking point.

The councillors maintain it was their duty to ensure there were no job losses and that cost to residents was not the priority.

The inquiry has unearthed a lack of understanding on the part of councillors, and perhaps general manager Brian Weir, of their role and responsibilities in relation to government tenders.

The ALP councillors have insisted it was up to them to pick the best tender, regardless of price.

However, senior council staff and Commissioner Richard Colley have said statutory regulations guide councillors to simply rubber stamp the selected tender.