It's that time of year again, when it is conventional to drink too much, to rush around snarling at your fellow harrassed shoppers, and to say things like, where has this year gone? And of course, time for the annual Olympian view of the year's theatre, as seen from the critical eyrie.

Glancing through my reviews, what strikes me principally is how much good theatre, of many different kinds, that I've seen this year. And, perhaps perversely, I finish this year feeling more optimistic about the state of Melbourne theatre than I began it.

2005 was dominated by two very different events - the radical shift of artistic direction at the Malthouse Theatre, and this year's extremely successful Melbourne Festival. Under Michael Kantor's artistic direction, the Malthouse has done the unimaginable - turned around the stale post-70s aesthetic of the Playbox Theatre and made a space for a broader perception of theatrical possibility. Likewise, the Melbourne Festival's 2005 program, by general agreement the most exciting for years, was a sell-out success. Artistic director Kristy Edmunds foregrounded innovative work by local and international artists which galvanised everyone who attended, sparking engaged (and often vastly differing) responses. Theatre is looking sexy again: more importantly, the broadening of aesthetic possibility is beginning to attract a different demographic, younger people who have heretofore rather spent their dollars on film or books. We can only hope that this trend continues.

On the other hand, theatre, as always, teeters in a state of permanent crisis, and there are many reasons to be worried about the future of the arts here. If even Hannie Rayson's absurd melodrama Two Brothers can prompt Federal Ministers to talk about abolishing the Australia Council, what happens if there's some real critique? This year also saw the abolition of the Australia Council's New Media and Community Arts Boards - both of which supported innovative artforms - under a major restructure, to the wide disquiet of the arts community.

The recent bundle of legislation passed through Federal Parliament includes amendments to the archaic sedition laws that potentially affect artists as much as journalists or anyone interested in social critique, and the banning of compulsory union fees at universities with a consequent disastrous effect on cultural life in our tertiary institutions. These laws represent the latest and most damaging salvos in an ongoing war by the right wing against Australian culture: only this week, the attack dog of the Right, Andrew Bolt, savaged the alleged "group think" of arts funding bodies (conveniently ignoring the fact, for instance, that the Australia Council also funds the right wing magazine Quadrant) , and it's hard not to wonder how much this indicates more aggressive government interference in - and ultimately, repression of - art that doesn't toe the official line.

More particularly, to return to theatre itself, there has recently been a rash of doom-laden opinion pieces about the lack of new Australian theatre writing. Even Helen Thompson, who has certainly seen more Melbourne theatre than I have this year, comments that there has been "a dearth of new Australian writing for the stage".

I am frankly puzzled by this perception. This year I have seen a lot of new Australian writing, in conventional and innovative forms. I don't want to minimise the difficulties playwrights face here, which are complex, and at once familiar to anyone working in theatre anywhere and particular to this culture. The fact remains that I've seen a lot of new Australian theatre writing this year, ranging from full-on mainstream adaptation (Andrew Upton's marvellous version of Cyrano de Bergerac at the MTC) to the innovative - Subclass26A at 45 Downstairs, for example, or Stuart Orr's brilliant operatic riff on Nazism, Telefunken and Margaret Cameron's poetic meditation The Proscenium, at the Malthouse.

We had Wesley Enoch's breathtaking (and breathtakingly directed) Black Medea, a Belvoir St/Malthouse co-production; ambitious, if ultimately flawed adaptations by Tom Wright (The Odyssey and Journal of a Plague Year); Ben Ellis' Kafka's Metamorphosis and Patricia Cornelius' Love - both of which, sadly, I missed as I was overseas. And in the smaller independent companies there were productions of a new generation of young writers - Lally Katz, Tee O'Neill, Angus Cerini, Robert Reid and others. And that's without even looking at the work La Mama constantly does in creating a haven for new writing, both with regular readings of new playwrights and productions.

So where is this dearth of new Australian writing? It's underfunded, no question; it struggles to be seen and heard - even, it seems, by those who have seen and heard it. But it's most undoubtedly there. And the best of it has a promising energy and intelligence, a restlessness which challenges the artform and the society in which it's produced.

Perhaps this perception has, in part, been fed by the tendency of independent companies like Theatre@Risk and Red Stitch to put on international plays. But it seems chiefly to derive from the change of direction at the Malthouse, and its abandonment of the Playbox program of doing only new Australian plays. This has led to assertions that the Malthouse no longer supports new Australian work, an argument that a quick look at their 2005 program would quickly dismantle. The policy does signal a move away from a conservative aesthetic dominated by the idea of the "well-made play", towards a more integrated model of theatre writing - the idea that, like Shakespeare, the playwright is a theatre worker who collaborates with others to create his art.

In any case, Australian theatre seems more broadly imagined than it was a year ago, and for that I am profundly grateful.

So, to my stand-out productions (or, at least, those I haven't mentioned yet). It will be no surprise to anyone that Ariane Mnouchkine's Le Dernier Caravansérail gets my vote (as well as, it seems, everyone else's) for the most significant production of the year. I suspect that Théâtre de Soleil's tour will come to be seen, in retrospect, as influential as Pina Bausch's tour was on Australian dance in the 1970s - its achievment, beauty and power were nothing less than inspiring.

At the Malthouse, Michael Kantor's production of Patrick White's The Ham Funeral was sheerly beautiful, and placed White where he belongs - squarely in the Australian theatrical tradition, from which he has been carefully edited for the past three decades or so. And Barrie Kosky's 21st Century cabaret with the amazing Paul Capsis, Boulevard Delirium, deserved its standing ovations.

Among the independent companies, I remember Anita Hegh's extraordinary one-woman performance of The Yellow Wallpaper; Act-O-Matic's very classy production of The Laramie Project; Chamber Made Opera's return season of its wonderful and witty send up of film noir, Phobia; and the poignant fairytale Felix Listens to the World, made by the young company Suitcase Royale. And I also would like to mention Out on a Limb, Sarah Mainwaring's moving performance art piece at La Mama, which has stayed with me a long time.

Theatre Notes is taking a short break for Christmas, but will be back with bells on - and perhaps the remnants of tinsel - for what looks like a fascinating 2006. The big question for me is, what now for the Malthouse? Will they be able to keep the momentum going? Tune in here to find out...

And a very Merry Christmas, or other seasonal greetings, to all my loyal readers and to the companies who have supported this blog. You've made it all worthwhile. Thanks too to those who brought the comments section to life this year - the more debate, the better for theatre, and the better for all of us.

Have a good one.