A long awaited expenditure report by transport consultants MRCagney found outsourcing through competitive tendering of ACTION operations, including vehicle maintenance and other functions, was the most plausible option for improving efficiency and "attractiveness of services".

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 Australian and New Zealand.

The report, received by the government in March but not released until this week, said privatisation would take several years to complete and would involve significant transition costs to the taxpayer. A sale would be in line with World Bank research on the cost of running public transport systems.

The new Transport Canberra agency will begin working on integration for buses and trams from July 1, 2016. Trams are set to begin running by 2019 or 2020.

Fare structures and expensive and inflexible industrial agreements for drivers are highlighted in the report, two areas the government says it will move to address in the future. Bringing pay and conditions into line with other Australian jurisdictions would save the ACT about $5 million annually, with Canberra drivers earning $21,880 more than drivers in NSW and South Australia. The report cautions like-for-like comparisons.

Changing trip caps and moving to distance-based fares would also save ACTION money. The government confirmed a planned fare increase will go ahead in January, but wants more time on a overhaul of fares.

Assistant Minister for Transport Reform Shane Rattenbury said any changes to pay and conditions for drivers and crews would require negotiations with unions as part of a new enterprise agreement, due in 2017.

"Clearly an expenditure review is focused on delivering business efficiencies," he said. "The government has looked at this review in light of that and our broader goals of making sure we're delivering a transport system that assists those in our city experiencing transport disadvantage.

"This is a public asset and the government wants to retain ownership of it so we can continue delivering services."

The report identified 116 bus services after 8pm on weekdays that could be removed from the timetable due to low patronage. The average number of passengers on the services was 5.2, a low rate for services running 62 hours per day.

The report also found plunging passenger satisfaction and slow falls in patronage, when measured against population growth. About 97 per cent of Canberra's population is served by at least one route, although 15.2 per cent is served by only one route.

On-time running of bus services has been "well below the target set by the ACT government", the report said. Patronage growth has not kept pace with population growth, while total gross costs have grown considerably and the network's trends compare unfavourably with most metropolitan bus operations in Australia.

Mr Rattenbury said customer service would be central to any decision making by the new agency.

Decisions are still to be taken on whether the ACTION brand will be retained for Canberra's buses, or how existing senior public servants, including Capital Metro Agency director Emma Thomas, will be incorporated into the new agency. ACTION management, which has been part of the Territory and Municipal Services Directorate, has been reorganised this year.

The new agency could also prompt a stand-alone public transport ministry to be created before the October 2016 election, potentially allowing retiring Deputy Chief Minister Simon Corbell to hand over responsibility for the tram line.

Separately, ride-sharing business Uber will launch in Canberra on Friday.