Many bus companies have already left Union station due to the traffic congestion. Of course we've noticed GO cutting service on bus route to Union such as the 21 Milton and 16 Hamilton Express, but intercity operators are doing the same. TOK Coachlines abandoned Union Station altogether, now terminating their Port Elgin route at Hwy 407 terminal.
Most Ontario Northland buses now terminate at Yorkdale with an intermediate stop at 407 terminal. Here's the current southbound schedule for Ontario Northland. The only buses going downtown are the ones that are going to the garage there anyway or the ones that are heading there anyway to start a northbound overnight trip.
This is definitely a mitigation but I don't think it's a solution. As others noted, it can take a long time to get downtown from some of the peripheral terminals so their success depends on there being all-day GO Express trains. Subways or local GO trains aren't as competitive.
That said, given that trains can become pretty competitive in the forseeable future I don't think there's a rationale for a busway downtown. The more cost-effective solution would just be bus lanes on Lakeshore Blvd for a couple blocks on either side of the bus terminal.