The ALP councillor was confident he had done his job, his house was in order and there was no corruption.

"We are totally different from Wollongong. People are trying to link us in. Let them put up, or shut up.

"I believe the truth will come out. I can do this inquiry with my head held high as I've nothing to be embarrassed about."

The terms of reference for the inquiry do not mention corruption, but some in the community say the stench from Wollongong's revelations this year can also be smelt in Shellharbour.

Councillor Hamilton agreed there had been serious problems in his council last year but insisted councillors had pulled up their socks since the Government demanded an improvement.

"There were some councillors out there who did not know and could not understand the parameters they're elected to work under," he acknowledged.

"Yes, there were mistakes made by the way councillors behaved, but now most councillors are prepared to look in the mirror and say 'yes, I could have done things better' and they're prepared to move on."

He said some had been "too involved with operational matters".

"I had councillors ring up and say, 'Why can't Mr Brown build a house on that property?' They're not allowed to do that."

Previously certain councillors were "shopping for an answer" by phoning around town planners and other staff, he admitted.

One of the inquiry's terms of reference is to look at the relationships between councillors and staff.

It will also look at whether councillors understand their roles and whether they are carrying them out in the best interests of ratepayers.

Cr Hamilton blamed the inquiry on a small group of residents.

"There are a lot of councillors that work very hard for this community, and it's a sad state of affairs that people who have done nothing for this city have brought this about," he charged.