Governments that employ more people than necessary, or that pay their employees more than the market will bear, are not doing any favors for the citizens - including the poor who are picking up the tab. There are instances where it didn't work, so we shouldn't do it anywhere. I have yet to see a case where a failure was really an indictment of privatization itself. Failures are almost always arguments for avoiding such poor practices as noncompetitive bidding, sloppy contract writing, or nonexistent monitoring of performance. It can breed special interests who will lobby for more contracts and services from government, even when that's not warranted.
Public bureaucracies lobby for more government, too.
This is an argument for taxpayers and the press to be vigilant, not an argument against privatization. Government officials may not do the right thing with the savings. It's true that when privatization generates lower costs, officials may have multiple options for realizing the gain. They may choose to avoid raising taxes or actually cut them, passing on the savings to taxpayers. Or, they may simply take the savings and squander them on some other dubious enterprise of government.