The Australians got spanked in London; their worst showing since 1976. To rub some chlorine into the wound it happened in a Commonwealth country too which for them was not quite a home pool advantage but if you were not racing a Brit you had some "second-string" fans rooting for you.
The opening quote from Reuters says it all:
"... As much as you think you're ready for it, the difference between world championships and the Olympics is a hundred times more pressure," freestyle specialist Eamon Sullivan told reporters on Thursday.
"We under-prepared for the expectations of the pressure and the experience of the Olympics and, unfortunately, it's a bad time to learn lessons," he added. ..."
I don't think that Eamon Sullivan is talking about "stage fright" here but rather that the competition is greatly improved and is more formidable even when compared to World Championships. Also of note is that perhaps Australia does not have much to work with?
As big as the Australian continent is the population is minute. With a land mass that is just about the size of the United States, the population there is estimated to be about 22-million citizens. To put how small that is into perspective, the city of Shanghai, China which is the largest city in that country has a population count of 23-million citizens. (China has about 76-cities)
Moreover, with such a small population it's impressive that Australian coaches have fielded such great athletes throughout the years and explains why they can take in a Ye Shiwen or a Sun Yang and turned that "unrefined resource" and reform it into a "beautiful diamond."
What the London Games has proven is that Australia may have the best coaches in the word but a small "pool" of athletes. In short: the problems facing Australian Swimming is not the pressure, it's the amount of available talent.
Above is YouTube movie called "Shift Happens." It is essentially an award-winning Powerpoint presentation that scared the heck out of the awards body that was judging it.
With emerging nations becoming more affluent and which contain larger populations, the United States may be next in line to get spanked.