Fergus Linehan has got the balance right at the Sydney Festival. There's more to it than pyrotechnics and cold beer, he tells Peter Crawley

'Another hellish day in Sydney," remarked Fergus Linehan with typical dryness. It was a perfectly clear and sunny afternoon last week, the temperature nudging past 27 degrees, as he neared the final days of his second festival in Australia, one that has enjoyed a critical and popular favour that some might consider embarrassing.

But "Sydney's favourite Irishman", as one newspaper recently anointed him, had reason to be content. The busy streets were festooned with hot pink banners relaying the festival's promotional mantra, "This is our city in summer." Box-office receipts had already broken last year's record high. And his colleagues at the Gate Theatre had just concluded a sold-out run of their Beckett Season, a cultural highlight of the festival.

Linehan regarded such approval ratings with equal parts gratification and scepticism, like the sunshine that may disappear tomorrow. "You've got to be careful you don't start believing your own press releases," he said. "I think that Australian organisations do like to create a figurehead in a way Irish organisations don't. But you know how it works; there's always a yin to the yang . . . We got a lot of things right this year and we got a few things wrong. And we're going to be called on that."

Programming the Sydney Festival, a three-week long interdisciplinary, multi-platform arts event, which stretches from theatre and dance to rock concerts and free outdoor classical performances, presents a somewhat broader challenge than that of running of the Dublin Theatre Festival, which Linehan departed in 2004. Where once he admitted that the theatre programme inevitably represented the personality of the festival director behind it, Sydney has asked Linehan to adapt to its own demands.

"This festival has a much stronger sense of ownership," he says, twisting his frame in an armchair in his sparsely adorned office. "And it's a much broader church. Its remit is all about the audience. The real challenge is holding all the needs together with coherence. How can you coherently draw a line between Uncle Vanya and Hot Chip?" Indeed, uniting the sturdy naturalism and taut ensemble playing of the Maly Drama Theatre of St Petersburg with the fey funk of London's electronica outfit is key to unlocking the riddle of Sydney. "Sydney's very deceptive," Linehan offers. "When you first come here, it seems like a hedonistic party town. In some ways it is. But you just don't get away with sending up some pyrotechnics and serving cold beer."

There is a demand, he admits, to create something "celebratory and which captures the mood of the summer", but, he adds, the varying evaluations of the tabloid and broadsheet press, the politicians and sponsors mean "you can't go straight into carnivale."

The solution seems to be in maintaining a balance between what is fun and what is credible, something Linehan describes as a strange dichotomy, but one he was prepared for by an upbringing where vaudeville and high seriousness never felt mutually exclusive.

That balance is conspicuous in almost every aspect of his programme - whether it's the quirky street-theatre context of Back to Back Theatre's extraordinary and probing drama, Small Metal Objects, in which the performers disappear into the pedestrian traffic of Customs House Square while the audience watch from a raised bank of seats, or the Gate massaging the knotted musculature of Beckettian prose into something accessible and compulsive within the glitz of celebrity turns.

As Linehan stresses, "It is Hot Chip, not the Abba Megamix. The intent is still serious."

You can see the strange dichotomy this delicate balance preserved across several stages in the Sydney Festival. Kaidan, for instance, an ethereal dance and percussion spectacle, choreographed by Australian Meryl Tankard, borrows from rarified forms of Japanese performance, incorporating the puppetry of Bunraku and the pulse of taiko drumming. But in its sheer ebullient energy it can also recall the accessibility of Stomp - who also performed at the festival this year. Uncle Vanya, meanwhile, in Lev Dodin's unhurried, wry and elegiac production, may not be immediately reconcilable with the delirious fleshpots and very well-lubricated acrobatics of burlesque group La Clique (performing in that most decadent and ubiquitous international festival venue, the Spiegeltent), but in their own ways they are each demanding and charming.

HOW THE GATE'S Beckett Season fits in may not immediately seem obvious, the discomfiting world of Beckett unlikely to ignite anybody's party town, but the three productions brought to the southern hemisphere by the theatre have received some of the festival's most glowing reviews, and enjoyed sell-out runs.

A notable postscript to last year's Beckett centenary celebrations, these one-man performances were each significantly adapted from non-theatrical sources - transposition from one medium to another long having been the Beckett Estate's ultimate no-no - comprising a revival of Atom Egoyan's production of Eh Joe (with Charles Dance now replacing Michael Gambon), and Barry McGovern's commanding performance of I'll Go On, based on Beckett's trilogy. But the star attraction, of course, has been Ralph Fiennes's performance of First Love, debuting in Sydney, and which has been adapted from Beckett's novella and directed by Michael Colgan.

On a balmy evening after the final performance of First Love, Colgan recalled the genesis of the project that marks his first return to directing since his appointment to the Gate in 1983. During Fiennes's appearance in Faith Healer early last year, the actor began reading Beckett, and his enthusiasm for the work led to discussions on performing a monologue.

"It became First Love," says Colgan. "Essentially what we're trying to do - and we're only on baby steps - is to act with as much obeisance to the words as possible."

All of which could give the impression that Colgan has exerted very little directorial pressure on the material, which remains unaltered from the novella and witnesses Fiennes performing for the first 20 minutes in almost absolute stillness, before a minimal set.

On the contrary; the performance has a considered shape and thorough understanding of the text's nameless character, Fiennes drooping his deportment to suit the wry, hangdog narrative voice of the text, taking pleasure in his anticipated epitaph, "Here under lies the above", while exuding a perverse revulsion with the world of the living. In his powerful, succinct performance, the dawning of love moves like a creeping affliction.

Colgan also directed Charles Dance in the revival of Eh Joe, and, more extraordinarily, coached Lou Reed through a poetry and prose recital of Beckett. Reed, the iconic musician who had come to the festival to perform his legendary Berlin album, was approached to fill in for Fiennes when the actor became unavailable.

"He's a rock star, for God's sake," Colgan puts it, sounding undaunted. "He was late coming in, and said he'd do it for me." They had met before, where Colgan sold him the idea with the words (and we're taking this story on blind faith), "Look Lou, Beckett's the man." Apparently satisfied with Reed's rendition of Roundelay and the maxims of Long After Chamfort ("Better on your arse than on your feet, flat on your back than either, dead than the lot."), Colgan has no desire to further his directing career. "There's no way in a million years that you'll read I'm going to direct A Midsummer Night's Dream next summer," he promises.

Nor - despite many invitations to stage First Love internationally, and Colgan's tendency to talk about the piece as a work in progress - are there any immediate plans to revive the performance in Dublin. "Ralph has a very full schedule," Colgan shrugs. "The plan is to leave it for a little bit. When we miss it we'll come back to it."

AS FOR LINEHAN, who signed on for a three-year contract as director of the Sydney Festival, returning to Dublin may not be all that easy. Presiding over a festival which is funded to the tune of $3.5 million and which receives an additional $5 million in sponsorship ("a big chunk of change"), Linehan outlines a different culture for managing the arts.

"In Ireland, we all grew up without money - you were doing the deals on the phone in the back of the Merc. You had to play the angles. In Sydney there's less mystery about the process: just do it."

Where the Dublin Theatre Festival comedown is an abrupt finish that slouches into a cold and wet November, the Sydney Festival cedes to two more months of summer, those "hellish" days in Bondi.

With the city currently beaming approval in the festival's greatly expanded performance schedule (from 190 performances last year to 270 this year) and its cannily reduced ticket prices (from an average of $60 to $45, with an extra consignment of $25 tickets available on the day from Tix For Next to Nix), the affection is apparently mutual. "There's a bit of a love-in for the festival at the moment," says Linehan, with a characteristic chuckle in his voice that suggests it can never be always so. Don't be surprised, though, if a festival flushed with cash and kudos is not keen to let Linehan leave at the end of his contract, and his endless summer continues.