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.
If anything, the article could be taken to show that any large organization is inherently destructive to efficiency and should be cut down for the good of society.
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.