Before the end of the year, the Government will have made significant revisions to its arts legislation, and the Arts Council, the principal organisation through which the Government distributes funding for the arts, will have put the finishing touches to its third Arts Plan. These documents will determine the shape, health and vitality of a large proportion of arts activity in the Republic for at least the next five years.

Visiting Dublin from Scotland last month, I attended an Arts Council seminar on the proposed direction of the next Arts Plan. The meeting took place at the Ark, the children's cultural centre in Temple Bar. It seemed that a process is being set in motion that could radically alter the climate for the arts in the Republic - and that the Arts Council is in the process of making itself more seaworthy.

Since the Arts Council was founded, in 1951, its grant from government has risen from £11,600 in its first year to £36.5 million in this financial year. It is hardly surprising, then, that the council's new plan calls for greater openness, transparency and accountability. But the new policies are about more than accountability. The relationship between government and the Arts Council - and, by extension, between government and the arts - is being renegotiated.

Similar negotiations have taken place in England and Scotland over the past few years, and they have resulted in a much closer alignment of the arts with government policy. As Robert Hewison wrote in his book Culture & Consensus, there is no clear agreement about why the arts are funded in Britain: it is as if they are funded by default. Successive arts ministers and arts councils have therefore needed to invent reasons for continued or increased funding that appeal to the priorities of the government of the time.

So while the government of Margaret Thatcher focused on the economic benefits the arts might deliver, that of Tony Blair is interested in what the arts can contribute to education and social inclusion. As funding follows the whims of each new government, the arts in Britain have become a political football.

In his essay Towards A Command Culture, Andrew Brighton argues that "a change has taken place in the rationale of state support for the arts in the United Kingdom. The arts are now thought of as an instrument of social policy . . . What seems to be implied and enacted by the present government's cultural policy is that certain social goals and political aims are so self-evidently good that subordinating much of publicly supported arts culture to them is justified. It seems we are seeing the tragedy of Soviet socialist realism replayed as a social democratic farce . . . The overt government demand on the arts is that they serve everyone and foster shared values in the name of social inclusion. The covert effect is to demote not just dissenting culture but also aesthetic integrity."

Art and artists do not exist in a vacuum, and if money from the public purse is used, it is necessary to demonstrate the wider social benefits of the activity. In Britain, however, the instrumental value of the arts has been emphasised at the expense of the aesthetic value. We do not expect our scientists to neglect their research in order to teach or undertake community service, but investment in culture is driven by an Alice In Wonderland logic whereby more and more funds are directed towards broadening appreciation of an art whose professional production is being starved of cash.

Under New Labour, the arts have become a fix used to plug gaps in other services. Engagement in the arts can offer life-changing experiences, having dramatic effects on people's self-esteem, confidence, attitude to learning and employability. Enjoyment of the arts is sustainable only if we continue to respect and invest in the work that artists produce in the first place, however.

When the Arts Council of Great Britain was set up, in 1946 - it has since devolved into the arts councils of England, Scotland and Wales - there was, as there is with the Arts Council in the Republic, an arm's-length principle that aimed to prevent the state from controlling the arts. In England, this arm has been amputated; in Scotland, a botched and bloody operation is still under way. In the light of these changes in Britain, it was interesting to take a peek at the drama unfolding in the Republic.

It may seem the Republic is lagging behind in the professionalisation of its cultural sector, but it is perceived, by observers in Britain at least, as particularly enlightened in the way it has passed legislation to support artists financially. The artist-regulated Aosdβna system and the cnuas - the renewable five-year annuity the organisation's members are entitled to - the tax breaks and the free flights are the envy of artists in Britain forced to teach or take other jobs.

Aosdβna may be less of a success than it seems from the other side of the fence - some of Ireland's most respected artists have taken years to gain membership - and artists have to achieve a high level of success before the tax breaks make much difference, so very few benefit to a significant extent. The opportunities do acknowledge the importance of artists to cultural vitality, however.

The long-overdue revision of the Republic's 50-year-old arts legislation takes into account governments' growing perception of the importance of the arts. In 1993, the government replaced the Department of the Gaeltacht with the Department of Arts, Culture and the Gaeltacht (now renamed the Department of Arts, Heritage, Gaeltacht and the Islands). The legislation, which the Dβil is expected to debate in the next few months, will look at the roles of the Minister and the Department in relation to the Arts Council, the structure of the Arts Council and the definition of "the arts".

A rumour before the seminar suggested a natural consequence of greater government interest in the arts might be to do away with the Arts Council altogether, but the Department's secretary general, Philip Furlong, gave assurances to the contrary - if anything, the Arts Council may receive more funding to expand its staff team. This support is due in no small way to Patricia Quinn, the council's director, who has been rallying defences in an attempt to redefine the 50-year-old organisation she leads.

Like many of the Republic's institutions, it seems, the Arts Council has a reputation for being paternalistic, furtive and secretive in the way it has conducted its business. Recently, however, it has put a huge amount of time and resources into trying to create greater transparency and accountability by developing clearer criteria for funding and identifying mechanisms to monitor and evaluate the performances both of its clients and of itself.

Mark Schuster was one of the speakers at the seminar. A professor of urban cultural policy at Massachusetts Institute of Technology, he believes the Arts Council represents the public, and he implied it was in a position to take decisions about arts funding that somehow represented public opinion.

The Arts Council is a quango, however, and has little or no direct contact with the wider community. It is the arts organisations themselves that are in day-to-day contact with the public. The Arts Council is the mediating body between the Government and arts organisations. Rather than assuming that it occupies the higher moral ground - as the voice of the tax payer, which it is not - the Arts Council will need to extend to its clients the respectful, arm's-length relationship it presumably wants with the Government.

Because of the amount of energy and resources going into modernising the Arts Council, there is a danger that it will lose sight of the need for its client organisations, which have small or non-existent development budgets, to have agendas and policies of their own. Were organisations expected merely to deliver the council's new policy, the problems that have surfaced in Britain - where a government hungry for greater power is snuffing out what it purports to be nurturing - would likely arise in the Republic.

Kate Tregaskis is an Edinburgh-based writer taking part in Critical Voices, which brings critics and writers to the Republic in a joint venture between the Arts Council, The Irish Times and Lyric FM. She co-founded Zone Gallery in Newcastle and spent six years as artistic director of Stills Gallery in Edinburgh. Her e-mail address is kate@ednet.co.uk