Well, less government leads to privatization of crucial infrastructure (airports, hospitals, banks, etc). Which still siphon government money, only now that money doesn't go to public good or government employees, but to private coffers, with no need to compete (regardless of "free market" hurr durr) since it's infrastructure and can not be allowed to fail.

That government can be inefficient is an efficiency problem.

That private actors basically "steal" taxpayer money is a lobby/regulatory problem.

Government does have some blame for the former, but you can't simultaneously regulate wall street (for example) and still blame the government for being in bed with them.