Psst! Don’t tell Stephen Harper, but it looks like the porn-again Canadian film industry is back at it, and this time under the prime minister’s very nose.

Sasha Grey, the 20-year-old queen of American porn, is in Ottawa to star in Smash Cut, a Canadian slasher flick from Zed Filmworks that’s shooting within a garter’s throw of Parliament Hill.

‘It’s good to be splattering the nation’s capital with fake blood again. It just feels right,’ says Smash Cut director Lee Demarbre (The Dead Sleep Easy).

Demarbre is pumped. He has masks, severed limbs and other props for his low-to-no-budget film, which shoots through June 4. He has a young and sexy lead. His producer, Rob Menzies, has Imagination Worldwide shopping Smash Cut in Cannes.

But lads, consider yourselves warned. Your film about a killer clown on a horror film set could get caught up in the Bill C-10 honey trap.

Smash Cut recalls David Cronenberg casting porn icon Marilyn Chambers in his 1977 horror film Rabid, or John Waters hiring Traci Lords for Cry Baby and Serial Mom, as it helps a Hollywood outcast cross over to mainstream moviemaking.

To go legit in Smash Cut, Grey, the 2008 Adult Video Network female performer of the year, will play a TV personality who poses as an actress in a horror film to find the killer of her older sister, a stripper.

While undercover, Grey’s character discovers that the crazed director of the film, who parades about in a clown costume, killed her sister and is using her remains as set props to impress critics and audiences.

‘She’s a genuine film lover – she knows more about Godard and Cassavetes than I do,’ Demarbre says of his star.

She’s also much in demand. After only two years in Hollywood, Grey has starred in more than 100 films – or enough hot whoopee to shock evangelist Charles McVety and any other Christian finger-wagger with Harper’s ear.

Indeed, it was while viewing the 2006 DVD Fetish Fanatic 4, where Grey snogs and does worse with gonzo porn star Belladonna, that Demarbre was first alerted to her acting chops.

‘She’s very young and she’s very submissive and she’s very nervous doing a scene with Belladonna,’ he recalls, explaining that in other roles she has convincingly played the aggressor. ‘She’s a damn good actor,’ Demarbre marvels.

But before anyone denies Smash Cut a tax credit for indecency, Demarbre insists he’s in the clear.

‘The only penetration is by knives and axes,’ he declares, promising Grey will remain fully clothed throughout his shoot, and has no sex scenes.

‘I don’t want to make a porn movie. I want to make a movie with Sasha Grey. I want to take her right out of the porn genre,’ he insists.

There are a few scenes set in a strip club with clothed dancers and no nudity.

Okay. One background dancer with tassels on her may raise a few eyebrows.

Casting Grey certainly spooked the Smash Cut investors, who asked why Demarbre had to target the raincoat crowd when Bill C-10 threatens to claw back key tax benefits for films the heritage minister finds ‘contrary to public policy.’

‘There was a lot of concern: ‘Why are you hiring a porno star?’ I was asked. I said, ‘Yes, I’m hiring a woman who works in the adult porn industry. But the script has nothing to do with pornography. It’s a straight movie,” Demarbre recalls.

Indeed, he describes Smash Cut as a love letter to B-movie legend Herschell Gordon Lewis, best known for cult classics Blood Feast (1963) and The Gore Gore Girls (1972).

Demarbre convinced Lewis to perform a cameo role in the splatter film, alongside David Hess, who played the lead role in Wes Craven’s 1972 film Last House on the Left.

Rounding out the Smash Cut cast is Michael Berryman (The Hills Have Eyes), Ray Sager, who starred in Lewis’ 1970 film The Wizard of Gore, and local Ottawa actors Jesse Buck, Michael Dubue, Jennilee Murphy and Guen Douglas.

Demarbre sees Smash Cut in the same vein as Cronenberg’s Crash or Atom Egoyan’s Exotica, genre-bending Canadian movies that dealt with necrophilia and pedophilia, but which do so in the breast – sorry – best artistic tradition.

A blood-drenched Smash Cut also promises fine touches of humor. The film’s climatic scene, to be shot in Ottawa’s Mayfair Theatre, calls for 200 extras to dress as clowns – complete with red noses, bow ties, wigs and makeup – so they can fake their own deaths.

Oh, dear, when the PMO hears about that.