Chief Minister Andrew Barr is holding out the threat of selling the ACTION bus network if he can't achieve the reforms he wants.
Mr Barr has repeatedly refused to rule out franchising the bus system to a private operator in response to questions in recent days. But he said the government was "initially seeking to achieve the reform under the current model" - with ACTION remaining in public hands.
"A more efficient and integrated bus system that provides better service and better value to the community is my priority. Delivering reform is my priority," he told The Canberra Times. "The model of the reformed bus system could take many forms."
The buses cost the Budget just over $100 million a year in government grants, but still don't come on budget, with a loss of $17.5 million in the last financial year.
In response to the increasing costs, Mr Barr commissioned a review by Brisbane-based transport consultants MR Cagney last year. The review is now with Cabinet, but has not been released.
The ACTION bus network has a staff of about 850, of which 670 are drivers - 410 full time and 260 part-time. The Transport Workers Union says 98 per cent of the drivers are members of the union.
Mr Barr's refusal to rule out a sale could be seen as a threat to propel drivers into accepting significant changes to the way the network is run.
Even this week, the government has described itself as hamstrung by the drivers' employment agreement which makes weekend and public holiday work voluntary.
The union's Canberra secretary, Klaus Pinkas, said he had sought a meeting with Mr Barr a month ago where he had received an assurance that drivers would remain as government employees.
He was comfortable with the reassurance, he said, especially in light of the ACT Labor Party's platform which says that no government services performed by government workers would be out-sourced.
"I'd take the chief minister on his word," Mr Pinkas said. "We have no reason to doubt him ... I can only go on what he's said to us."
The Transport Workers Union is a powerful force in the ACT branch of the Labor Party.
A government spokesperson said the MR Cagney review was in response to "ongoing cost pressures". The Government had to spend an extra $30.4 million over the past two years - $24 million extra in 2013-14, and $6.4 million in 2014-15.
"The review is examining operational and financial performance, ACTION's asset base and level of services, as well as the future sustainability of government expenditure, fares and service delivery models," the spokesperson said.
Mr Barr said the government would consider the review over the coming months and make decisions in consultation with the community and the workforce.
"I'm planning an unprecedented investment to create the world-class public transport Canberra deserves. It will be an integrated network of bus, light rail, taxis, private cars, bicycles and walking, where the latest technology – be it rideshare or smart parking – makes things easy for commuters," he said.
"The first stage of light rail is on track, but reform is still needed in buses and taxis."
In 2013-14, ACTION received $103 million from the government, which included the $92 million payment for services plus concessions for people on low incomes and special needs. It made $22.5 million in fares and advertising.
Its biggest expense was employees, at $82 million, up from $76 million the year before.
Its operating loss for 2013-14 was $17.5 million, up from a loss of $8 million the year before.