It seems to me that the problem the OP describes is not confined to governments. If some layer or department of a large company's bureaucracy is consuming abou

It seems to me that the problem the OP describes is not confined to governments. If some layer or department of a large company's bureaucracy is consuming about 1.5% of its revenues (just as the Australian tax office consumes about 1.5% of Australia's GDP), then the upper management will never have much interest in driving that proportion down to 0.5%. So as the company grows, that layer or department will grow as well in spite of automation, just as the tax office has grown.