David Cronenberg, one of Canada's most famous and successful movie directors, told a Senate committee Wednesday that checking film tax credits against a public policy test could be disastrous for the industry.

He also said that the controversial tax measure buried in Bill C-10, which would restrict federal funding for productions deemed "contrary to public policy'' is a solution to a non-existent problem.

The Toronto-born director told CTV Newsnet Wednesday that "this seemingly innocuous clause is actually a most disastrous piece of legislation."

"The truth is that there is already a layer of filtering . . . for things that contravene the criminal code," Cronenberg said of the current laws for applying for film tax credits.

The 65-year-old Cronenberg said he has 40 years of experience of applying for Canadian tax credits and there has never been a case of a pornographic or hate-mongering film or television show receiving federal funding.

"(Funding agency) Telefilm is not allowed to propose something that is pornographic, or criminal or hate propaganda," he said.

Government granting agencies such as Telefilm Canada already check applications against the Criminal Code and do not extend funding to a production that breaks the law.

"You have to ask why after 40 years . . . that this is suddenly a problem?" Cronenberg asked.

"Why do you need this additional layer of the same thing?'' he asked the Senate committee. "Other than to satisfy the sense of control of that the ministry of Heritage has -- is that the only reason? Because there seems to be no other reason.''

Cronenberg is one of many artists, including director-actor Sarah Polley, actor Sandra Oh and director Ang Lee, who have panned the proposed tax change.

The Conservative government has argued that the change would protect Canadian taxpayers from funding objectionable productions.

Heritage Minister Josee Verner has said that, if this legislation passes, she spend a year consulting with the industry to come up with a formula for defining what's "contrary to public policy."

Cronenberg, has been the director of many controversial, but critically-acclaimed films that have overt violent or sexual themes, such as the Oscar-nominated "A History of Violence" or last year's "Eastern Promises."

After Verner was criticized on the matter in March, she said that the proposed tax change would address "only the most extreme and gratuitous material, not mainstream film such as 'Eastern Promises.'"

Cronenberg laughed at the comment in front of the committee, noting that he's rarely been called "mainstream."

He said that the comment only came after the movie was critically acclaimed, when it was "very safe to say this movie is OK."

He noted that the film began with a man's throat being graphically cut open, includes a extended scene of a naked man fighting two men to the death in a knife-fight and also a scene of a voyeur watching a man having sex with a prostitute.

"I'm not confident at all that the Telefilm money that was invested in 'Eastern Promises' -- and helped to make it happen -- would not have been withdrawn by the minister of heritage, or whatever committee (she delegated to screen the film),'' said Cronenberg.

The new power -- buried in the 569-page bill -- would give the heritage minister the final word on what is or isn't allowed to be funded. And regulations are written into the act could be changed at will by the government.

"To me, that's totalitarianism,'' said Cronenberg.

On Newsnet, Cronenberg said that if the bill passes, Canadians could flee towards Hollywood in even greater numbers than they do now.

"We'd be making American films that have nothing to do with Canada," he said.