Jervis Bay Territory's courts, schools and even driver's licences are managed by the ACT government, despite being more than 200 kilometres away, as part of a fee-for-service deal with the Commonwealth.

Around 400 people call the area home, which includes the largely Indigenous village of Wreck Bay.

However a report obtained by The Canberra Times under freedom of information laws showed the arrangement was having "sometimes perverse outcomes", particularly in the area of justice.

Jervis Bay residents were having to travel to Canberra for simple court matters as poor internet and mobile phone reception was affecting video links, and those arrested and later granted bail have sometimes been left stranded in the city.

Residents must also serve out custodial sentences at the Alexander Maconochie Centre, instead of the nearby Nowra jail, and community orders can't be supervised in Jervis Bay Territory.

An ACT government spokeswoman said it was up to the Commonwealth to consider the recommendations of the report, which included striking a deal with NSW to allow detainees to serve out jail sentences closer to home and funding an early intervention service to support families at risk of having their children taken away.

She said the report was commissioned as part of a review of their memorandum of understanding to provide services to Jervis Bay, to identify service priorities, gaps and options for improvements.

"ACT government maintains the position that we are not best placed to provide services to Jervis Bay Territory. However, while we have a role to play we will continue to strive for the best outcomes for that community," she said.

The level of funding the ACT receives for services in Jervis Bay has risen over the past three years.

It received  $3,415,770 in 2016‑17 and $3,583,836 in 2017‑18, and is expected to get $3,986,774 this financial year.

The service provision is designed to be cost-neutral to the ACT, although the report found the the front-line deliverers of services like police and health workers "just make it happen" irrespective of who has the responsibility or budget for it.

But the lack of access to NSW services, despite the geographic proximity, has created a feeling that services are not provided by the ACT government to the same standard as those provided to Canberra residents.

The distance and size of the community has previously been identified as a barrier to the ACT's ability to provide adequate services to Jervis Bay Territory.

However NSW pulled out of talks to take over service delivery in 2017.