The other problem with government (and to a lesser extent private) has been the swing in industrial relations. Firstly, I'll put myself out there, and say honestly: I fall pretty much into centre-left. You need protection and workplace laws to protect employees. But, currently it's just too hard in private industry to (legally) fire staff who simply don't perform, and in the public service, it's damn nigh on impossible. Several members of my family and several of my friends work / have worked in varying roles / departments in the public service, and the amount of stories they have on staff who not only do no work, but also simply do not show up to work 50%+ of the time. Yet these staff are not fired, and in one case a friend who is the manager of one such recalcitrant has nearly torn his hair out for two years trying to get a guy who frequently didn't show up to work, frequently showed up extremely late to work when he did, and did absolutely no work whilst at work, fired, and still it hasn't happened.
Part of the problem is the unions as well - I think the unions are necessary, but somehow the unions have gained too much power, plenty of them became corrupt (and several involved in organised crime), AND somehow some have even swung to the right by being run by those from the right faction - how the hell a fundamentally left ideal swung to the right I'll never understand. Additionally, some of the collective bargaining done by the unions is obsene - the pay levels of poorly educated workers was higher than university educated workers in some industries (there were stories floating around 5 years ago of staff who worked the ticket booths in Circular Quay getting paid $80k per year!).
In saying all that, I still support the government owning national infrastucture (like Sydney Airport as well), and running important key services. Some stuff you just don't want entrust outside of the government.
BTW, agree that inefficiency is a disease of large bureaucracies. My partner works in an extremely large multinational. The local (Australian) management are so top heavy that it's farcical. There's just loads of inefficiencies at her company. I couldn't work there; it'd drive me nuts. What's more, they've even had a few rounds of lay-offs, and the middle and senior management ignored nearly all recommendations from the private contractos auditing the company to lay off upper management, whilst laying off the much much cheaper bottom of the tier staff, and shuffling many roles, making some overworked. The result is actually that less work gets done by overstressed staff and the place gets more inefficient.
Australia is also a great example of what happens to a country without a recession in 20 years: many uneconomic practices and companies don't get corrected / forced out, and our productivity drops.