THE CREATIVE Scotland Bill was introduced in March, signalling the end of a process that began nearly five years, two administrations and one cultural commission ago.

But rather like the Hidden Masterpiece in Balzac's story, it appears that revision, editing and addition have left the finished bill a rather murky proposition. In Balzac's tale all that could be seen on the canvas was a giant foot. Arts organisations and MSPs fear the Creative Scotland bill is far from a masterpiece, and potentially a licence to stamp on the established arts in Scotland.

The bill merges the Scottish Arts Council and Scottish Screen to form Creative Scotland. This new agency will, according to the government "stimulate new ways of working and new ways of investing", "be an advocate and leader for creativity and the creative economy," and "nurture inspirational creative excellence."

But its passage through parliament so far has been anything but inspirational. The bill was described as possibly the worst piece of legislation the finance committee had ever seen. Senior civil servants have been scolded for being unprepared and unable to answer questions. And this week, culture minister Linda Fabiani gave evidence to the committee scrutinising the bill in which she appeared to backtrack on a SNP manifesto pledge in a display described by one MSP as "like a car crash".

Arts organisations say the real losers will be the artists. They say the bill's language is so vague it will make Creative Scotland completely ineffectual or "invite a war", and its focus on the economic impact of the arts has some non-commercial art forms concerned about their place in the brave new world.

So what are the issues creating a turbulent time for the government's and Scotland's flagship arts body?

One of the biggest concerns being raised about the bill is its refusal to define such terms as "the arts", "creativity" and "culture", all areas that Creative Scotland aims to operate in. There is also no mention of artists either. This has lead some MSPs and arts professionals to call it "vague" and "woolly".

Bob Last has his own word for it: "a fudge". He is a film producer who has been based in Scotland for 30 years. He is currently working in Edinburgh on a major animated film with Oscar-nominated director Sylvain Chomet. Names and definitions are clearly important to him.

"Creative Scotland is a nonsensical name," he said. "It's so annoying in terms of conception it makes me want to try to move my businesses out of it. I'm looking to be the first person to find a non-creative business. Even if you've a business making more efficient parking spaces you have to be creative.

"And that is very damaging because it suggests a fudge and a confusion. Creative Scotland will either have no impact or lots of unintended consequences."

Many people in the arts fear these consequences will include non-traditional art forms and creative industries siphoning money and resources away.

"What's to stop this body from funding literature?" said Donald Smith, director of the Storytelling Centre in Edinburgh. "There's nothing. This lack of definition thing just doesn't work. You have to have a remit."

Malcolm Chisholm, Labour's culture spokesman, agreed with Smith that the bill gives the arts community no assurances that they won't lose out.

"I would like to see a definition of the arts to ensure, from a parliamentary point of view, that Creative Scotland shall focus on those issues," he said. "Because there is an issue about not having any accountability about what this organisation is going to do."

Other figures within the arts described the lack of any mention of artists as a serious omission. According to the Scottish Artists Union, which represents all visual artists, Creative Scotland should make being an artist in Scotland an attractive proposition.

"But we fail to see how that can happen when the word artist isn't even used," said Terry Anderson, president of the SAU. "If your job includes creativity, you're not troubled by the word artist."

The government and the team setting up Creative Scotland disagreed. A spokeswoman for the Creative Scotland transition project pointed out that the Royal Charter establishing the arts councils does not refer to specific art forms.

Linda Fabiani last week denied that the bill is vague and defended the lack of definitions of arts and creativity.

"If we define what creativity is, we will be in danger of stifling it. Definitions are constraining. I find laughable the idea of folk who want to be creative working their way through legislation or guidance to decide whether their brand of creativity matches one of the subsets that are listed. We should not define such terms."

Creative Scotland's remit includes everything that the Scottish Arts Council and Scottish Screen looked after, as well as the "creative industries".

This new responsibility has worried many that its focus will move towards activities with a direct economic impact at the expense of the arts.

People like Donald Smith are concerned that subsidised art forms like literature, visual arts, dance and community projects will lose out.

"I'm not happy to have it announced, that actually after 20 years of working with people in every area of Scottish society to get people on board, it's now about the creative economy, stupid," he said. "It isn't saying how can we deliver for the people who deliver."

Bob Last believes film will be given disproportionate attention.

"As a citizen I object to that. As a citizen I want the arts authority to support all art. But that's the reality. We're the big boys."

There has already been disagreement over who should be responsible for overseeing the development of the lucrative video games industry, with Scottish Enterprise claiming it has that as part of its remit.

The tension over who looks after what between enterprise bodies and Creative Scotland is "unseemly", according to Seona Reid, former head of the Scottish Arts Council and director of Glasgow School of Art.

"There needs to be political clarity," she said. "To have Creative Scotland and Scottish Enterprise scrapping over digital media is first of all, unseemly, but also unresolvable."

The tension between Scottish Enterprise, Creative Scotland and the government further displayed itself over budgets.

Creative Scotland's budget will be the combined sums currently allocated to the Scottish Arts Council and Scottish Screen, amounting to nearly £70 million.

As a way to increase funding for the new body and to match its increased remit the SNP had a manifesto pledge to move Scottish Enterprise's budget for the creative industries to Creative Scotland. Yet while giving evidence to the parliamentary committee last week, Scottish Enterprise said that would not be happening and was not even being discussed.

Committee member and Labour MSP Ken Macintosh said this was tantamount to the SNP breaking their promise to the creative community to fund Creative Scotland properly. He added: "The minister needs to radically rethink her approach to this bill and ensure the funding is there to give our artists, writers and musicians the encouragement and support they deserve."

Fellow committee member and Liberal Democrat MSP Jeremy Purvis estimates that with inflation and finance minister John Swinney asking for efficiency savings, in three years' time Creative Scotland will have 15% less in its budget than the Scottish Arts Council and Scottish Screen have now.

"This is an agency that's setting itself more work to do, but with a cut budget," he said. "That's a recipe for a decline in the sector, as opposed to what the first minister told us would be at the heart of government policy."

Transition costs will further reduce Creative Scotland's cash. No firm figure has been confirmed about how much the setting up of the new body will cost, which was one of the finance committee's main gripes, but estimates vary between £1.4m and £3m.

Arts organisations are furious that money which could be spent on grants is being spent on a "bureaucratic exercise".

Lorne Boswell, the Scottish secretary for Equity, the performers' union, pointed out that £3m is a lot of money in arts circles.

"Most equity members struggle to make a living, most subsist to pursue their art," he said. "If you take £3m out of the economy for a bureaucratic exercise, that's going to have massive implications for employment opportunities not just for Equity members, but artists who depend on the subsidy going into that sector."

A spokeswoman from the Creative Scotland transition team said: "Creative Scotland will be looking at a range of alternative investment models, with the aim of finding and increasing sources of funding."

Tax incentives, venture capital, loans and corporate investment are all potential models previously mentioned by the transition team.