From the headquarters of the Perth International Arts Festival (PIAF), Sean Doran has a panoramic view. The Swan River is high and wide, full of gleaming white boats and usually bathed in pure, unhindered sunlight. Picture perfect. A tourist-board image of a city that shouts loudly about its isolation and sells lifestyle with a capital L.

"People here think they've found paradise," says Doran with a hint of irony.

Since he was tempted from his position as programme director of the Belfast Festival in 1998 and brought to Perth to overhaul and direct the city's festivals from 2000 to 2003, some of Doran's experiences have been far from heavenly.

His debut festival, though applauded for its vision and daring, lost 1.5 million Australian dollars. He has faced hostility from sections of the sensitive local arts community and, particularly after last year's disastrous financial results and a series of controversial resignations, some vicious, often personalised attacks in the local media.

As his second, less dazzling PIAF draws to an end, Doran is adamant that the criticism, the mistakes and the shake-ups were part of a necessary catharsis.

In August 1999, six months before PIAF 2000, he quoted Joseph Campbell in the state parliament house. He had chosen the venue to project PIAF into the political arena, and the lines "love thine enemies because they are the instrument of your destiny" to highlight his understanding of the precarious road ahead.

"When you enter such change, those who are against you are part of what is going to make the change actually happen," he says. Doran was "very torn" about leaving his Belfast job a year earlier than planned. He felt he was beginning an important process there and if his part-time contract had been made full-time, he would have stayed. But the Perth offer was lucrative and he was excited about the move.

He soon saw it would take a while to come to grips with the dynamics of his adopted city. Nearer to parts of Indonesia than to Canberra, Perth has always been subject to the tyranny of distance. Adelaide, the closest state capital, is a two-day drive away. Though Western Australia has a symphony orchestra, a ballet, an opera and a handful of theatre companies, Perth's arts community is, says Doran, very much at odds with itself.

Doran went in with a new team. His lack of contacts made him vulnerable and the shortage of available skills - again a symptom of Perth's isolation - caught him on the hop. But he quickly found that his biggest problem was not being an Australian.

"Every time my name has been mentioned in the last two years, it has always been prefaced by Irishman," he says.

"It's not `Sean Doran, festival director'; it's `Irishman Sean Doran'. I noticed it, I suppose, from a humorous point of view. I found it funny the way it had always to be said, but what it was revealing was: `You're an outsider running this festival.' "

Some press articles, he says, became blatantly racist in tone. He quotes one which asked why a man from a city "better known for its bigotry, bullets and bombs" was directing PIAF.

"In one way, it was just unearthing the frustration and corrosion that is sitting here in the cultural infrastructure and was sitting here with this festival," he says.

By 1998, the festival was suffering from a severe case of arrested development. The University of Western Australia (UWA), which is responsible for PIAF, presented Doran with a five-year strategy dating from 1997. The message, he says, was clear: UWA wanted evolution.

Doran introduced a fringe festival, a popular music festival and a writers' festival. The first two have survived and grown bigger and better. The latter, Doran hopes, will be reinstated in 2002.

He wants to leave behind a series of mini-festivals, which he describes as the "architecture" of his four years. This concept has been developed further for PIAF 2001, to include a chamber music festival and a curated visual arts festival, which includes exhibitions by Bill Viola and Australian artist Robert MacPherson as well as a series of installations by Western Australian artists.

"These festivals are led by locals," says Doran. "I'm picking young specialist locals who are, through their experience, becoming future festival directors."

This may in turn attract new sponsorship and government funding.

The reaction to this year's line-up is inevitably tempered by the memory of PIAF 2000, when an 18-hour classic Chinese opera, Robert Wilson's version of A Dream Play and The Angel Project, a collaboration between Irish director Deborah Warner and 80 locals, briefly turned Perth into a centre of artistic excellence and innovation.

Sceptics were stunned, and even his critics had to admire the boldness of the eclectic programme. But there was plenty of fire to face.

When a number of staff left, including the artistic director of the writers' festival and four business directors who had been appointed instead of one general manager, a frenzy of media allegations followed. Doran was accused of mismanagement, financial and otherwise.

He says he was often confronted by "skewed" or "incomplete" information, sometimes on the pages of the West Australian, a tabloid and the region's only daily newspaper.

"There's this extraordinary and I think very naive response that we're going through this sort of chaos," says Doran. "But that is what happens with change. No matter how you plan it out, no matter how you want it to go, it is messy. And it is very very incoherent. You ask any organisation in the world. "We got a lot of it right. Nobody ever talks about all the staff who stayed." Despite widespread perceptions to the contrary, he says last year's big international events were within budget. PIAF 2000 achieved the second highest box-office return in the festival's 48-year history. It was the film programme and the Watershed Popular Music Centre that dragged the figures down. This year, both are in profit.

Last June, UWA, in agreement with Doran, appointed an interim general manager. So far, PIAF 2001 is exceeding its boxoffice target of $2.5 million, a figure which was deliberately set low to ensure that expectations were met.

This year's leaner budget - $7.3 million compared with $9.5 million in 2000 - is reflected in the festival's programme, with fewer grand ventures, international acts and attention-grabbing names. The general consensus so far is that PIAF 2001 is a little blander than its predecessor.

In keeping with Doran's intention to "articulate Perth's geographical position", there's a strong focus on the Indian Ocean region. South Africa is particularly well-represented. Suip, a black comedy about the street people of Capetown, a raw and shocking piece of theatre, made its international debut at PIAF 2001, as did The Durban Township Boys who, as part of the street arts festival, wowed peak-hour commuters with a wild mix of dancing styles.

Though the line-up is less glitzy, with no large-scale commissioned pieces like The Angel Project, Doran refuses to describe PIAF 2001 as low-risk.

"In its own isolation, this year's festival, I would argue, is actually really strong in what it's giving in an extraordinarily restrictive budget," he says. The risks were there, he insists. The legendary Merce Cunningham Dance Company gave six one-off retrospectives as well as, on January 30th, a free performance on the beach before an audience of about 6,000. "It was absolutely wonderful," Doran says. "The set was the sky, sea and sand, and the twilight was the blackout. When the sun dipped under that sea, the show stopped."

PIAF is at a crossroads. The oldest international multi-arts festival in Australia, it is underfunded compared with similar events in the country, running on half the budget of the biannual Adelaide Festival.

Currently receiving $500,000 per annum from UWA, PIAF has both benefited and suffered from its links to an academic institution.

Last November, UWA appointed a review panel of Australia-wide arts professionals to examine the festival's long-term future. The report is due later this month. While UWA has said it is keen to maintain links with PIAF, it also says it "needs partners".

According to Doran, PIAF is now "bigger than the university". He thinks the ownership and responsibility might, in the future, be "shared to a wider extent".

Doran wants PIAF to be one of the premier festivals in the world and by 2003 he hopes the budget will be $14 or $15 million.

"Believe it or not, in a country that is seen elsewhere in the world as being quite liberated or liberal, people are afraid to take risks," he says. "In the arts, this is happening more and more because of the beating and thrashing you will get from an economic rationalist point of view. My view is that festivals are artistically led, full stop. They have to be, and they have to take risks. If they do not take risks, then they should not, ought not, exist."

Despite the verbal beatings and thrashings he has weathered over the past two years, Doran's energy and enthusiasm do not seem in the least dissipated, although Perth, he says, could lull a person into a dangerous complacency. That, however, would not be Doran's style. He doesn't know what he'll do or where he'll go when his contract ends. He never thinks like that, he says.

En route to his initial interview, when he first flew over Western Australia and into Perth, he couldn't believe how, with only 10 minutes to landing, there was no sign of life below.

"The miracle of how this place exists is quite extraordinary," he says. "It's sitting on the edge of the desert." Pioneer territory rather than paradise. Somehow it seems to suit him.

The Perth International Arts Festival continues until Sunday. For further information see www.perthfestival.com.au