The state's top transport authority frustrated attempts by the public operator of Sydney's buses to improve their on-time running, an internal report claims, raising questions about the government's justification for privatising routes in the city's inner west.

The internal report by the government-owned State Transit obtained by the Greens under freedom of information laws says it was knocked back in a request to Transport for NSW two years ago for $5 million in savings to be funnelled back into improving running times and timetables.

"[Transport for NSW] would not invest all or part of the $5m saving in more realistic running times," the State Transit report says.

A year earlier, Transport for NSW did not formally respond to advice by State Transit for a full-service review to improve on-time running of buses.