I agree. Government is not good at innovation.
To make a profit I think rockets will have to replaced by another method of lifting. Having to lift tons of fuel while lifting the payload is too close to lifting yourself by your own boot straps.
I see the use of a superconducting Mass Driver to accelerate payloads to escape velocity as the most practical at this time. But a Space Elevator may be doable in the future.
I just dont see rockets ever being able to turn a profit transporting goods to and from space. The overhead is just too high.