The Melbourne Festival this year had a surreal edge. As capitalism crashed about our ears amid headlines of financial doom, it had the air of a dance at the edge of the abyss. I kept feeling that we were standing in the etched light of an oncoming storm, with long shadows streaming behind us. A little voice kept saying to me, This won’t happen again.

As we all know, it’s the last of Kristy Edmunds’ festivals, and boy, has she given us a party for the past four years. From 2005, her first festival and still one of the best this city has seen, she’s changed the main stage aspirations of this city. People started going to events with intense curiosity and emerging to have fierce arguments (I still remember the couple having a stand-up fight over asylum seekers after Ariane Mnouchkine’s Le Dernier Caravansérail). They were festivals of passion, excitement, artistic depth and, often, controversy. Her programming attracted some of the most vicious and sustained media attacks I’ve seen on an artistic director - first for being too “elitist” and then – when it was clear people were going – for being too “populist”.

Despite the attacks, she steadily continued to follow her nose, attracting a younger demographic with programming that reached into both popular culture and high art, and which unobstrusively demonstrated the humane and complex politics of art. Most importantly of all, she brought us great work, from Peter Brook to Jérôme Bel, from Romeo Castellucci to Diamanda Galas. This year has been no different: looking over what I’ve seen, the quality has been just as high. Possibly higher: festivals can be cut in an infinity of ways, but I’ve had a brilliant time. As in previous years, there have been some disappointments. But what would a festival be without something to argue about?

Over the 17 days of the festival, I got to 21 events. I’ve seen a lot of international work of outstanding quality this year – the Schönberg Ensemble, OKT/Vilnius City Theatre, Tim Etchells & Victoria and both Patti Smith performances were all five star events. And for the first time, Australian works stood substantially beside them – Chunky Move, Lucy Guerin Inc, Back to Back, The Eleventh Hour and the Black Arm Band – without inviting invidious comparison.

Doing the stats, that adds up to half my festival experience being pure gold: a high proportion by any standards. And I missed some of the buzz-making stuff – Wendy Houston, Deborah Hay, Ben Cobham and Helen Herbertson, Goran Bregovic – which by all accounts would have added to my tally.

Around these events was a lot of high-quality work that was fascinating or moving without grabbing my whole heart – Tim Crouch’s ENGLAND, for instance, or DJ Spooky’s Antarctic symphony, or Batsheva – or was just plain enjoyable, like the Interpreti Veneziani Baroque Ensemble (as an aside, I read Clive O’Connell’s dry, indifferent Age review of this inspiriting concert and decided that I don’t want to be a music critic). There were a couple of disappointments – Barrie Kosky and Liza Lim's The Navigator was one of those, and the markedly unremarkable Glass/Cohen collaboration The Book of Longing. And then there were a couple of dismaying failures, both Australian – Jenny Kemp’s Kitten and, notoriously, KAGE’s Appetite. Of which more in a moment.

That seems like a pretty successful festival to me, and certainly no less successful, aesthetically speaking, than in previous years. At the closing night party, Edmunds revealed her “theme”: the fragility and strength of human beings. The theme I kept tripping over was poetry, which perhaps might add up to the same thing. Certainly, this was a festival that kept reminding me, with exquisite poignancy, of my own mortality, of the complexity and pain and joy of existence.

But I constantly encountered people who expressed disappointment. There wasn’t, they said, that one inspiring event; or there wasn’t enough edge; or they had just been to see Appetite (which generated an extraordinary level of hostility).

Given what I was experiencing, I kept wondering why. I looked through my reviews of previous years, and couldn’t see how what was on offer was any less substantial or interesting than previous years. This could of course be my own incapacity. But it made me think.

I suspect two things changed this year. Firstly, Edmunds has been hoist on the petard of her own success: her last three festivals have lifted the bar out of sight. She generated such enormous expectations that it was perhaps impossible for people not to be disappointed with something. And the other was what I thought one of the strongest aspects of this festival, its Australian content. This was a brave move on Edmunds’ part, a long-term expression of faith in our local talent. In terms of overall work, we saw some extraordinary things; but I think it also backfired.

Instead of the unexpected, we got the familiar: Chunky Move or Back to Back didn’t erupt as new discoveries, but as work we can see in our own backyard. And perhaps we primarily expect the festival to bring us amazing discoveries from elsewhere, rather than to show us ourselves.

Also, programming local work changed the politics: it was easier then to question what was not chosen, and for a certain schadenfreude to emerge when the annointed didn’t deliver. I suspect that’s part of what happened with Appetite.

In a way, this year’s MIAF showcased both what is best and worst about our culture. My god, we can do extraordinary work. Most of what was there deserved to be there, to stand beside the best work that came from the rest of the world. And the work that collapsed dramatically in the face of comparative pressure – Kitten and Appetite - seemed to epitomise the failures of our theatre: shocking writing, fuzzy conceptualisation, narcissistic self-involvement, a tendency towards shallow moralising. Which is perhaps why they felt so scarring.

If my speculations are correct, it’s rather depressing: no matter what our achievements, value still lies elsewhere, rather than here. However, we can be almost certain it won’t happen again. The incoming artistic director, Brett Sheehy, is not notable for the same kind of programming depth that Edmunds has brought to Melbourne over the past four years.

Moreover, my instinct is that the arts are heading into rough times under the dubious rudder (pun intended) of our Arts Minister, Peter Garrett, who has not demonstrated, at any point since his appointment, an iota of moral courage. Nor much interest in the arts. His first act was to cut the staff at the Australia Council – a decision that didn’t create much protest, because who cares about bureaucrats? But I thought it an ominous straw in the wind.

And now it seems he's the smiling man with the axe. Last week, the Australian National Academy of Music received a peremptory fax from Garrett telling them that their funding was to be summarily cut: a decision that artistic director Brett Dean (composer extraordinaire and internationally famous viola player) says he refuses to accept. Today the Australia Council – buckling under an inflexible budget that has been straining at the edges for years – announced that 11 companies, including Queensland’s La Boite, have had their funding cut. This despite the new artistic directorship of David Berthold, who suddenly finds himself not at the helm, but out of a job. (Update: David Berthold assures me in the comments that he most certainly is still in a job, and that La Boite - unlike ANAM - will be going strong next year, albeit on a smaller scale than originally planned).

This is in a climate in which the arts are on the back foot in many ways. There is the dwindling quality of mainstream arts coverage. The brutalising idiocy of so-called cultural commentators like Helen Razer or Age arts editor Raymond Gill doesn’t help. And this in part accounts for the hostility towards the arts community expressed in the Henson brouhaha earlier this year, which itself is heralding a new form of puritan repressiveness, best summed up by the campaign to cut funding to companies that depict smoking.

But it seems wrong to end on a note of doom after such a brilliant time. I want to thank the 13,500 readers who accompanied me on this 17-day wild wild ride. And, as I thought after the inspiring Black Arm Band concert, it’s gutless to despair. As the man said, climbing the mountain in Longfellow's bizarre poem: Excelsior!