I'm not sure Stephane Israël's warning is directed at governments. It's more of a warning call for all European industrials who should increase their efforts to prepare for the present and upcoming US competition.
I mean it's not as if Ariane 6 is being built entirely by government money. It's more complicated than that. As a matter of fact, a new company Airbus Safran Launches[1] has recently been created out of the two big aerospace companies and is working mostly on Ariane 6. As I understand it, the CEO of Arianespace is calling for more initiatives like these.
It's a bit like with aerospace, when Boeing started building big airlines, European companies gathered and formed Airbus. They were not government owned but I supposed the government did intervene some way or an other considering it was a strategically crucial economic sector.
Also, whether the government funds an aerospace company is a bit blurry. SpaceX is privately owned but its major client is the government and, as Stephane Israël often complains about, they get extremely advantageous and arguably unfair contracts notably with the US military. It's kind of a government funding in disguise.
That being said, money is not the only issue here. The big thing SpaceX has is passion : since those guys think they're basically saving the world or something, they work much harder than anyone in Europe. I mean it's surely much easier for an engineer to keep working late at night when he thinks that his work will allow man to walk on mars and save the human race from extinction. That's the only way I can explain the extreme speed at which they're making progress when compared to what is done in Europe.
1. http://www.airbusafran-launchers.com/