If Austerity cut waste, it would probably work. The problem is that in government waste usually stems from bureaucratic calcification and corruption. Calcified and corrupt bureaucracies are highly resistant to change and have the system "wired" to defeat it, so they don't generally get hit much. Austerity's cuts fall disproportionately upon social safety nets and productive activities, hence the result.

I've been of the impression for a while that government waste and corruption grows without bound until it destroys the host, resulting in a revolution or some other kind of "reboot," and then repeat. There appears to be no way of actually cutting it without setting fire to the entire thing. Few things in nature are as tenacious as a parasite.