The picture of some of the country's leading television producers clutching thermoses of coffee as they wait, like teenagers at a rock concert, for the bureaucrat's door to open offers a telling glimpse of the industry at work.

Seldom has the willing subservience of culture to the imperatives of state been quite so nakedly displayed – even in Canada, where the nauseating is the norm. Naturally, the folks in the industry are a little upset: the taxpaying public, long accustomed to industry harangues on the necessity of "telling ourselves our own stories" and other nationalist clichÈs, might not be so easily separated from their money if they ever got a look at how the business really operates.

Officially, the story is about a bureaucratic "snafu." The money comes out of something called the Canadian Television and Cable Production Fund, a $200-million annual allotment. In the business, it's known as "Sheila's money," after federal Heritage Minister Sheila Copps, which tells you all you really need to know: not one thin dime of the fund is from the minister's personal fortune, but as far as the industry is concerned, she might as well be Lorenzo the Magnificent.

About half the fund is distributed through the License Fee program, of which half is tithed directly from the cable and broadcasting companies, the remainder coming out of the minister's departmental budget – which is to say, from the taxpayer. The money is doled out on a first-come, first-serve basis, to those productions that meet the usual complicated criteria of "Canadianness" – hence the lineups.

But this year one group of producers got shut out, and they're not at all happy about it. Which producers would that be? That would be the ones who had already received assistance from the other side of the fund, which is administered directly by Telefilm Canada. It seems that before they can go back for a second helping at the public trough, these producers have to show proof that their Telefilm grant has been approved. And by the time Telefilm got around to mailing out the notices, a number of leaner and hungrier producers had scarfed up all the money.

So the jilted producers have done the Canadian thing, and filled the papers with sob stories. As it happens, those productions having to make do on only one grant include some of Canada's most heavily hyped programs – shows like Riverdale, and Cold Squad, not to mention Wind at My Back. Without the additional slice of public funds, we are warned, many of these programs might not be back in the fall. No more Riverdale! Can the country ever survive?

To bolster their case, the singly granted shows are putting it about that they are the truly "Canadian" productions. For in order to qualify for Telefilm funding, it's not enough merely to hire the requisite number of Canadians: the content itself has to be "distinctively Canadian." What does "distinctively Canadian" mean? If, say, you did a show about a group of television producers lining up for government grants, that would probably count.

The programs that did get in under the License Fee Program wire, on the other hand, are dismissed as "industrial Canadian": shows like Psi Factor and Once a Thief that may employ a lot of Canadians, but are indistinguishable from imported dreck – as opposed to the proudly, self- consciously Canadian dreck that Telefilm funds.

But wait a minute: many of these programs are made by major Canadian production houses like Atlantis and Alliance – companies that brag about their contribution to nation-building every chance they get, to enormous publicly-funded profit. Could it be that we have been conned all these years: that programs that were justified in the name of nation building were in fact nothing more than old-fashioned industrial subsidies?

But is it any more defensible to be enmeshing the arts in the promotion of "distinctively Canadian" themes? I know of no aesthetic theory that connects the worth of a work of art to its nationality. The aim of the program, rather, is entirely political: to create a national identity, the better to justify the existence of the Canadian state. That may be an eminently worthy ideal, but it is poisonous to art. Which may explain the usually dire results.

In most countries it is held that the arts emerge from that broader fabric of customs, values and ways of life that make up a culture. Only in Canada is the reverse held to be true: that with enough public funds, the arts can invent our culture for us. It doesn't make much sense, in cultural or political terms.

But it sure seems to appeal to the artists.