Building the 12 kilometre Gungahlin tram line will free up one million bus kilometres to be used elsewhere in Canberra's bus network, Planning Minister Mick Gentleman says.
Mr Gentleman was responding to a report from Auditor-General Maxine Cooper on Friday, which was highly critical of the government's handling of the bus network.
Dr Cooper found targets are not being met, reporting is inaccurate, and there are insufficient buses and depots. Her audit of the "frequent bus network", which was supposed to deliver buses every 15 minutes on key routes, found few routes meeting the target.
Oversight of the transport strategy was not effective, with the group that was supposed to monitor it meeting infrequently and now disbanded. If the government was going to reach its targets it would need to introduce significantly more buses, Dr Cooper found, also pointing to failures to meet targets for shifting people from cars to public transport, walking and biking.
Mr Gentleman said the government would make a formal response to Dr Cooper's report "in due course". It had already announced the creation of a new agency, Transport Canberra, to run both ACTION buses and Capital Metro from July 2016.
The new agency would address the "planning and coordination issues" raised by Dr Cooper, he said.
The government was committed to a "more convenient, efficient, affordable and reliable" public transport system and was convinced that light rail was the only solution to problems with increasing congestion, growing population and reliance on cars, he said.
Light rail brought solutions that buses could not achieve.
"A light rail line not only brings increased development along route corridors, allowing for greater urban density and renewal, but provides a fixed, permanent service for commuters, ensuring long-term reliability of service," he said.
"This in itself promotes investment in the corridor as residents and business know that there is a permanent public transport line servicing the area. In other words, a light rail line drives demand whereas bus routes vary depending on demand."
More than a million bus kilometres saved along the light rail corridor would be used elsewhere in the bus network, Mr Gentleman said.
But Liberal transport spokesman Alistair Coe said the audit report highlighted poor management and "demonstrated it would be foolish to go ahead with light rail".
Mr Coe pointed to the government commissioned cost-benefit analysis of the frequent bus network in 2010, which found a ratio of 3.59 ($3.59 of benefits for every $1 spent), compared with the government's light rail cost-benefit ratio of 1.2.
But the 3.59 cost-benefit ratio of the frequent bus network relied on shifting people out of cars into public transport, Dr Cooper's report said. Her report showed that in 2011, 7.8 per cent of people used public transport for their journey to work, well short of the 9 per cent target. The 2016 and 2026 targets (a 10.5 per cent share of work trips in 2016 and 16 per cent in 2026) remained "a major challenge", she said.
Dr Cooper recommended the cost-benefit analysis of the frequent network be updated taking account of the tram, changed plans for new buses, and the risks of not meeting targets for moving people on to public transport.
Mr Coe said the audit report came on top of the release of the MR Cagney report, which showed 10 per cent fewer people were riding buses than in 2011.