Kilkenny Fine Gael TD John Paul Phelan is tipped to be appointed chairman of the powerful new Dáil budgetary committee when it meets for first time tomorrow.

The 15-member Select Committee on Arrangements for Budgetary Scrutiny will examine the key decisions underlying next October's budget and will also have power to influence and change the document.

Mr Phelan was widely expected to be promoted to a minister of state and was disappointed not to be selected. He was previously a member of the Banking Inquiry committee and the finance committee in the last Dáil.

The election of the chair will be the first to use the D'Hondt system, which allots chairs of committees in proportion to the size of the party or grouping. The system gives Fine Gael the right to choose the chair of the first committee; Fianna Fáil the second; Fine Gael the third; and Sinn Féin the fourth.

With Fine Gael taking finance, Seán Fleming of Fianna Fáil will be appointed chair of the Public Accounts Committee. Fine Gael is then expected to choose either justice or health.

Independent Clare TD Dr Michael Harty, who supports the Government, has expressed interest in chairing the health committee. It is not known if any deal is in place to accommodate that scenario. Sinn Féin is then expected to choose whichever of justice or health Fine Gael has decided against.

The committee is required to report back to the Dáil committee on reform within 35 days of its establishment with a number of recommendations for statutory and other changes.