There are few people in the world who have borne witness to as many shows as Melbourne festival’s new artistic director Jonathan Holloway, so when he describes a production as “the single best work I’ve ever, ever seen in my life, anywhere, ever” you write down the name (The Echo of the Shadow by Barcelona’s Teatro de los Sentidos) and circle it twice – and then go see it at the 2016 Melbourne festival.

Running through October, the festival will be Holloway’s first at the helm, following seven years at Norfolk and Norwich festival and, more recently, a successful four-year stint in Perth. “Successful” is putting it lightly. Holloway was responsible for Perth festival’s 2015 centrepiece, The Giants: the larger-than-life “puppet show on steroids” brought to Western Australia by French troupe Royal de Luxe. Organisers estimated that the production – which became almost synonymous with the festival itself – was seen by 1.4 million people.

One year on, Holloway puts the triumph of The Giants down to timing: “It was the right piece of work at the right time in the right place,” he says. But as we sit down to discuss his first program for Melbourne festival, which was announced in full on Monday, it’s hard to dismiss the expectations that one production set.

“For a period of time I did just sit at home and go, ‘Oh God, what now?’ I think everybody did,” Holloway tells Guardian Australia. “Everybody involved [in The Giants] – whether they were the artists or the city or the people who supported it, or the people who followed it or the people who watched it – there is always a ‘what’s next?’ ... [city festivals] are the Olympic Games of the arts.”

To get the gold, Holloway explains, the festival should be used as an ​active way of understanding​ each city at that particular moment in time.

“Perth feels very English in a way, and Melbourne feels quite mainland European,” he says, when pressed to compare them. “Melbourne works in ways that many cities don’t, and it has a self-belief which is exciting and interesting. It has an argumentative personality, too.

“In Sydney and Perth, people make statements and then everybody goes, ‘yes, that’s it.’ Whereas in Melbourne, somebody makes a statement and somebody else will say ‘I vehemently disagree, because of what happened in 1974’, and then that will be the discussion.”

For a festival director, these differences in personality lead to a difference in approach. “The role of the festival in Perth was about city animation, energy, bringing things that would otherwise never come ... whereas in Melbourne, people know the arts and culture so well – it’s probably the most well-served city in Australia, when it comes to culture. And so the job becomes completely different.”

Budget limitations don’t help. At Perth festival’s peak, the year of The Giants, Holloway had $22.5m to play with ($3m of which was Giants-specific). Meanwhile, the Melbourne festival budget is $10m-$11m – about $8m less than for Sydney. Of course every festival director wants the biggest budget, but Holloway has worked out how to make his small pot sound better: “Melbourne festival’s role isn’t about sheer quantity and animation; it’s about going to places no one else can, or would, or has gone before.”

For Melbourne, and for Holloway, that involves using what the city already has: a tight city grid, a love of public art, and – of course – the laneways. After the welcome to country, Tanderrum, on festival eve, Melbourne festival 2016 will open with Les Tambours de Feu: a free outdoor spectacle of live drumming, pyrotechnics and special effects from Basque street theatre company Deabru Beltzak. In the Catalan tradition of the correfoc or “fire-run”, the drummers – dressed as rams – will start at Federation Square and weave through the city’s laneways, over the bridge and into the south.

“It’s loud, it’s tight, it terrorises people, it explores the city,” Holloway says. “It’s archly European – it’s a tradition – but it feels very Melbourne. When these sparks are flying off the laneways and all the grafitti, it’s going to feel so alive – so like you’re in Barcelona on an October night, running with the fire.”

Also weaving their way through the city are the Melbourne art trams. Under an initiative struck between the government and the arts festival in the 1980s, local artists use the trams as canvases – one on each line – which act as roving galleries for eight months every year.

This year, for the first time, the project includes a “community tram”, which will pay tribute to a famous feminist mural that was graffitied over earlier this year. To Holloway, this project represents the best part of the Victorian government’s approach to the arts: “Mainstream it, right? Mainstream it, and drive it right through the centre.”

The Melbourne festival program may be more modest than those of Perth and Sydney, but there are some big names involved. Paul Kelly and Camille O’Sullivan are presenting a world premiere – one of 10 in the program – of a new show based on the writing of Yeats. “It was the quickest decision I’ve made in the job,” Holloway says. Legendary Canadian theatre director and playwright Robert Lepage brings the Australian premiere of 887; acclaimed New York choreographer Faye Driscoll presents the first in her trilogy, Thank You for Coming: Attendance; composer Philip Glass performs an interpretation of Jean Cocteau’s La Belle et la Bette; and the National Theatre of China returns with Two Dogs, the most seen play in China.

But if budget is a limitation, so is space. This year, two of Melbourne festival’s cornerstone venues were unavailable: the Sumner theatre at Melbourne Theatre company, and the State theatre, which will be taken over by the Ring Cycle. “It’s given us license to break the mould,” Holloway says. “We’re going to work with the city that exists.” The Hamer Hall, for instance, will be turned inside out for the world premiere of new work from Back to Back; and an ice skating rink in Docklands will be converted into a dance on ice for Vertical Influences, by Canada’s Le Patin Libre.

Meanwhile, two hair salons – one in the CBD, and another in Stonnington – will be the stages for Haircuts By Children, in which kids aged between eight and 12 are invited to cut the hair of the adult public, and engage them in a conversation about youth empowerment.

But the program would not be complete without the Echo of the Shadow by Barcelona’s Teatro de los Sentidos – the best show Holloway has “ever, ever seen in my life, anywhere, ever”. A site-specific labyrinth production, only one person can enter at a time, to spend 75 minutes exploring a new world in bare or stockinged feet. “It is absolutely transforming as a theatre piece. I came out of it different,” Holloway says, his face lit up. “I came out of it speechless – which doesn’t happen very often.

“I walked over to get my phone and my jacket and my shoes from the people who had them in a box at the end and they said, ‘Mr Holloway, we have a call for you’. It was the director. His voice was very slow, and he said, ‘Jonathan, I would love for you to come to my house in the Barcelona hills tomorrow afternoon for a cup of tea, to have a chat.’ I handed the phone back and asked them, ‘Does that happen to everyone?’. They said, ‘No. That bit doesn’t. But everybody looks the way that you’re looking now.’”

• Melbourne festival runs from 6 to 23 October