I think their approach is governed by the following considerations:
1 They are not prepared to alienate the very public sector unions which actively supported them in election.
2 They do not want to give up control over an activity. I think that it is very hard to convince government to get out of anything.
3 It gives them lots of influence in the marketplace - eg store locations, terms of trade.
4 Making the type of changes that are needed will not help them get re-elected.
5 The only real change that is even feasible is to provide greater access and better service - prices will not go down - so is this the type of benefit that is even worth the effort/bother.