Canberra's ACTION bus network is a "strong candidate" for privatisation, a new report from a national transport lobby group says.
It is the second report in less than a year that has advised placing ACTION in private hands; the first by a government commissioned review late last year.
But the government says it plans to hold onto the territory's bus network.
The new report, commissioned by the Tourism and Transport Forum, said franchising bus networks in Sydney, Brisbane and Canberra could lead to $1 billion in savings over five years.
The biggest benefit was to be had in Sydney, the report found, with $500 million in savings over five years if Sydney Buses was privately operated.
But Canberra also had potential to join capital cities Melbourne, Darwin, Adelaide and Perth and privatise the whole of its bus transport network.
"ACTION buses in Canberra are a strong candidate for competitive tendering and inclusion of the proposed light rail in the contract would make it very attractive to private operators in a similar model being embraced by the NSW government in Newcastle," the transport forum's chief executive Margy Osmond said.
"Our report shows that cost savings of over 20 per cent have been achieved around the world through franchising. In Australia, this could equate to an estimated $1 billion saving over five years that could be reinvested in better public transport services."
In October last year, the ACT government rejected calls to privatise ACTION operations, including vehicle maintenance, after recommendations made by transport consultants MRCagney.
The move would deliver savings of as much as $47 million each year in the longer term, nearly half of the $107 million taxpayer subsidy paid to ACTION in 2014-15.
Canberra's buses recorded an operating loss of $11 million last year and received about $7.20 in public funding per passenger, twice what other similar public and private bus operations received.
About 17 per cent of ACTION's costs is recovered through fares and commercial revenue, significantly lower than other public and private networks in Australia and New Zealand.
A government spokesman confirmed on Sunday the government's position had not changed. He said the government was implementing some of the first report's recommendations through the creation of Transport Canberra.
The new Transport Canberra agency – which combines the bus and future tram network – will begin working on integration for buses and trams from July 1, 2016. Trams are set to begin running by 2019 or 2020.
The new report, from the transport forum and consulting firm LEK, specifically recommended franchising government-run bus services.
Franchising was a "great model", Ms Osmond said, because it kept infrastructure such as buses and depots in public hands, while contracting out their operation.
The transport forum report pointed to a review of ACTION by the ACT Auditor-General in 2010. It found that ACT government subsidies had steadily increased from $60 millon in 2005-06 to $77 million in 2010-11.
The review said there was significant scope for ACTION – which carries 18 about million passengers a year – to improve operational performance and cost effectiveness.