Letter to the Editor

September 22nd, 2011 → 12:34 pm @

Here is an open letter to an editor that 2 National newspapers chose not to publish. No one cares. The letter ties together many related problems which I have highlighted in . You have a read and tell me that I am crazy. I don’t think I am.

Thanks, John

Open “Letter to the Editor” by John Scheel

Sirs, please accept this letter which deals with a complex issue that cannot be properly explained with fewer words. To date, no newspaper has broached this subject. Please review seriously.

McGuinty’s Public Private Partnership Scam

Ontario’s major labour unions are lining up with big buck ad campaigns hiding under the name “Working Families” to support McGuinty’s Liberals. They fear austerity and haircuts the likes of which are proceeding without abandon in the U.S. right now. They want Ontario to continue on the free spending path it has been on right through the lingering recession of 2008/2009. Their logic is founded on greed and self preservation, nothing else.

Here’s how McGuinty is manipulating Ontario residents using their taxes to get their votes. Much of his hidden agenda relies on Public Private Partnerships or PPP’s which are often masked as Infrastructure Projects. The PPP’s have many purposes. They let union pension funds (e.g. Teachers, OMERS, CUPE) to invest in 100% “safe” projects at high interest rates that private citizens cannot get. The unions receive this gift to build back the 40% pension funds losses of 2008. PPP’s also employ all the construction-based unions to build assets, many of which we don’t need. PPP’s may only account for 5% of Ontario’s GDP but probably control as much as 10% of the votes available through union members’ families and motivated voting. At the same time, McGuinty creates employment and while committing no new Government debt because private funds are used in PPP’s to replace what once was public borrowing. A comforted general public only sees the surface through lies which misrepresent the PPP’s as risky business better left to the private sector. This is one of the slickest con jobs ever put on Canadians. PPP’s are consummated in secret. No details of the financings are public, even to Freedom of Information requests. That should scare the hell out of Ontario residents.

It gets worse. Not only are the unions pulled into the PPP schemes but so is most Canadian big business (see www.pppcouncil.ca). Have a look at the membership of this prestigious organization – businesses are lined up to prostitute their principles to win PPP business from government. This is at the expense of the Canadian people-at-large who are the ones eventually over-paying. Companies (and their partner investors) are ripping off PPP’s for excessive profits in the build and operate phases while the public will over-pay for assets it doesn’t need through fees and taxes that will be too high. While union members are part of the public-at-large, they accept the ante of the higher fees because they get the jobs and high wages to build these PPP’s (which are a means to an end). The same goes for owners and employees of the companies involved. More than 50% of Canadians are porking the remaining Canadians. The whole PPP product is built up on lies. It is sold on short term gains – no one talks about the long term costs. This is a devious scheme and McGuinty has perfected it more than any other Canadian politician whether he knows it or not.

It gets even worse. PPP’s also mask governments’ participation in the GDP because former government projects are sold as “private” but in reality would have been government projects if done some years ago. For example, today we build hospitals that end up as privately run numbered companies. Who does Statcan think those employees work for? Some time ago, government would have paid via debt and maybe one in 4 projects would have been done because there was a priority screening process in place. Such expenditures were linked directly to taxes and votes and elections. Money was scarce so we did not build everything on the laundry list. Today, anything qualifies because the money comes from pension funds and big business, attracted by out of sight, guaranteed and alluring interest rates. Today, jobs are created, companies are busy and profitable, share values rise and all that also brings more votes. So McGuinty’s electoral reach broadens on a sham.

The way Canada used to be successful has flipped 180 degrees from reliance on the corporate sector to government infiltration of far more than the 43% of GDP it officially controls. The more private funds directed at PPP’s means there are less funds available for real commercial activities which have always been the ones that drove the real economy. Business is sitting back and accepting 7% for debt financing when it may have taken its money and risked it for 20+% ROE’s on projects that used to create long-term real jobs. This self-imposed castration by big business is slowly and quietly killing Canada and subliminally leading us deeper into socialism. The bonding between government and business is called corporatocracy which, according to WikiPedia is “a system of government that serves the interest of, and may be run by, corporations and involves ties between government and business”. The more the ties, the more and bigger the government and the bigger the real share of government in our GDP! Continued government intrusion is insidious. So is cancer until it is too late. On a broader scale, almost every major business in Canada is already either licensed and/or controlled by government which restricts open market competition which, in turn, leads to higher consumer prices which all but guarantees tidy corporate tax revenues. Let’s face it, Canadian governments and corporations are no different than Siamese twins sharing organs.

Across Canada, PPP’s may only account for 4% of GDP today. That will be much higher in a few years. Their collective effect on the long term economy is sort of like a blanket thrown over a fire so it will never get to burn properly – just smolder along.

Anyone who craps on PPP’s will be seen as anti-economy, anti-jobs and anti-Canadian. Massive PR campaigns assure this. No one wants to take the castor oil! That is the problem of the Ontario Conservatives who must fight this entrenched malaise that has tentacles into every corner of our country. I think Canadians ought to demand openness and transparency regarding PPP’s and their future in our country.

Am I the only person who is out of step with this thinking?

John Scheel


Where It All Started

August 30th, 2011 → 8:13 am @

John Scheel, speaking recently in the summer of 2011 about where it all started and why he decided to write, “Someone Gives A S**t”.

Link to video: http://youtu.be/Dp2ApP1B4os


Coming Soon!

August 8th, 2011 → 12:30 pm @

Please return here soon for my first blog post.


FP Letters: Tax millions lost in the wind

April 11th, 2011 → 7:54 pm @

Ontario is pumping at least $47M annually into this green leader

Re: Profit in Sustainable Energy, Kristopher Stevens, Sept. 4

This column criticizes Parker Gallant, an intelligent writer who tells it like it is using facts. Mr. Stevens never once gives us a meaningful number that describes how the money sucking wind, solar and other renewable projects actually get financed. He resorts to unsubstantiated, subjective, qualitative and emotional language to defend his lobby group comprised of industry players. Pure lobbyist drivel! Go get a real job.

Consider the Wolfe Island Wind Farm owned by Canadian Hydro Developers/TransAlta, which had reported revenues of $13-million from July 2009 to June 2010. The investment, before any costs of integration with Ontario’s power grid, was $486-million. Any reasoned calculation shows that to break even this operation would need about $60-million of revenues. Interest payments alone on $400-million at 8% would eat up $32-million. At $13-million of revenues the Ontario government is pumping at least $47-million annually into this prized renewable energy leader. The only sustaining comes from the Ontario government – i.e. you and I. The exact losses cannot be determined because the government’s deal involves private enterprise and so the Ontario Power Authority (OPA) will not release numbers to show how far we taxpayers are bending over. OPA staff should get real jobs too.

If Mr. Stevens wishes to prove his credibility, I challenge him to provide the readership a financial model of how the Wolfe Island Wind Farm is justified. Build it from the ground up, cost item by cost item and then run the capital structure, financing and cash flows out for 30 years. Please do not include subsidies of any kind.

I defy Mr. Stevens to come back with a break-even number that is less than $0.24/kwh on a hard cost basis for power actually produced. If he were honest he would add another $0.06/kwh for the real costs of shutting hydro facilities down, for accepting fluctuating power levels, etc. I see $0.30/kwh as wildly unnecessary and inflationary compared to the $0.03/kwh to $0.06/kwh we now pay for wholesale power. Give us your numbers, Mr. Stevens.

If you are uncomfortable with Wolfe Island, then give us the contracted numbers that Samsung signed up for with OPA which, officially, is paying $0.13/kwh for Samsung’s wind power. This cannot be done commercially.

Show me. You won’t and you can’t for fear of divulging just how severely the public is being taken to the cleaners by industry and government. You are pieced off on the buttered side of the fence, so I don’t expect you to make waves by answering my challenge.

John Scheel


Budget Delegation 2011

April 5th, 2011 → 8:39 am @

John Scheel, speaking at the Oakville budget delegation, 2011, says Oakville is a “Sick” company.

Link to video: http://www.youtube.com/watch?v=iT-p_JGLaVo&feature=related


Oakville Transit an Expensive Dream?

April 4th, 2011 → 3:28 pm @

Letter to the Editor (by John Scheel):

I have read three emotional letters for and against Oakville Transit. It seems that things are always done by emotion and pitches to placate minority groups in Oakville. No one cites numbers which should be reported to put reality into what is going on. Oakville is on a “build it and they will come” transit dream – a very expensive socialist experiment. Consider these costs (close estimates) and statistics for 2009:

Total riders 2,500,000
Average revenue/rider $1.85
Total Revenue $4,625,000
Operating Costs $20,000,000
Depreciation (est’d) $3,000,000
Total Annual Costs $23,000,000
Total Annual Loss $18,375,000
Gross Cost/Ride $9.20
Subsidy/Ride $7.35
Annual Subsidy/Household $301.23 (61,000 households)

Oakville has about 95 buses to carry 2.5 millions riders a year. London (Ontario) has 150 buses to carry about 22 million riders. The Canadian average subsidy for 104 municipal transit operations is approximately $0.60 for every paid $1.00 fare.

Oakville has probably the worst performing municipal transit operation in Canada by far. The building of the $55 million maintenance facility to serve Oakville’s empty, idling buses is an adventure in more extravagant government waste and downstream costs. I was told that the Town’s own survey showed that 5 employees of 100’s that work at Town Hall actually commuted by bus! Someone at Town Council has to wake up to reality and recognize that Oakville is a suburb not unlike many in Los Angeles. The growing annual waste of $18.4 million represents around 8% of the Town’s operating budget. I don’t enjoy watching my money wasted like this. I challenge anyone to dispute my data. I further challenge the Mayor and Councilors to use the bus system whenever on Town business.


John Scheel, Oakville

Link to document: http://www.oakville.com/articles/oakville-transit-expensive-dream/


New Oakville Hospital

April 4th, 2011 → 6:04 am @

Oakville resident John Scheel makes a presentation to Council on March 3, 2010, to discuss his concerns with the proposed new hospital.

Link to TownTV video: http://www.towntv.ca/noh-scheel100303.htm


A pox on P3s, critic says

April 4th, 2011 → 5:49 am @

Barry Critchley, a columnist with the National Post, writes about John Scheel and his new passion (column below).

John Scheel, who trained as a chemical engineer and ended up as a merchant banker, has developed a new passion in retirement: dispelling the supposed advantages of private public partnerships, the P3 sector.

In a nutshell, he believes they are more expensive than they should be, both from an operational and financing point of view and that they generate excess returns to the consortium that builds and manages them. Add they are not transparent.

Scheel swung into action because of plans to build a $1.5-billion hospital in Oakville, a city on the outskirts of Toronto, and the need by the local council to ante up $200-million, which it will raise over a 30-year financing period through a special tax levy on all residents and businesses starting in 2015. Scheel read all he could and concluded the project doesn’t make sense, arguing alternative financing schemes do not work, the hospital is not an Oakville responsibility and that the hospital, more than three times as large as the current hospital, is too big.

Scheel argues a P3 project will always be more expensive because the winning bidders are not able to finance on terms as good as the government, the low-cost borrower. “They are extremely expensive due to the interest spread [or the higher rate the winning bidder is required to pay]. The government hands the whole financing to the private sector and the private-sector financing comes in 200-250 basis points more than the government would pay,” he said.

For instance: a 2% extra spread on $1-billion of debt translates into $20-million a year, or $600-million in nominal dollar terms over the 30-year life of the project and at least $300-million in net present value terms. [The actual NPV depends on the discount rate used.] “It’s a real number that has to be built into the costs. And there are only a small number of firms bidding on the jobs. It’s not a market,” said Scheel, noting similar U.S. projects cost less than in Canada. And when they are built here, they often run over budget.

Scheel, who is writing a book on government waste, a good chunk of which will be devoted to P3s, notes governments of British Columbia, Alberta and Quebec are also pursuing P3 transactions. By one estimate, more than $5-billion of such projects are in the near-term pipeline (including a number of hospitals) with about $15-billion already spent on them.

Not all have been winners. A 2009 study of four British Columbia P3 projects by Blair Mackay Mymett, concluded that “the cost of P3s exceeds traditional procurement methodology for the projects” and that the “methodology used by Partnership BC to compare the P3 projects to the public-sector comparator is biased in favour of the P3 projects.”

So what are the arguments for P3s? They allow the development of much-needed infrastructure projects, projects that might not get done if they had to rely on government financing. And they take place against the backdrop of the need by government to get consolidated debt off its books.

On its website, Infrastructure Ontario says its alternative financing and procurement model “uses private financing to strategically rebuild vital infrastructure, on time and on budget, while ensuring appropriate public control and ownership. We believe this model — with the inherent private-sector efficiencies — will create an overall lower cost for taxpayers than if the government financed projects directly.”


Link to National Post article: http://www.financialpost.com/opinion/columnists/story.html?id=df1e677d-0168-4fe7-a328-17b56e220d40


Oakville Transit a taxpayer cash sinkhole

March 12th, 2011 → 11:49 am @

Oakville Transit a taxpayer cash sinkhole (Toronto Sun Column)

By John Scheel, Guest Columnist

Oakville’s transit system has been mushrooming in size recently – against all logic.

Consider that 95% of the town’s 61,000 homes have cars. Oakville is a bedroom suburb, duh?

Council, led by the mayor, has foisted a costly obsession on taxpayers. Its transit costs blossomed from $13 million in 2007 to almost $20 million in 2009.

The routing was changed from a circular system to a grid system to provide more coverage. In response, the bus fleet has jumped from 70-odd to almost 100 vehicles, all purchased new of course to support jobs and the economy.

Transit employment jumped from 156 to 203. At first look these buses and jobs are desirable, but they are a total waste and unnecessary.

And for all that expenditure, ridership has remained steady at about 2.5 million rides a year.

Each rider pays an average of $1.85 per ride, leaving revenue at $5 million, if you round up generously. To break even the town needs a $17-million “subsidy” from local taxpayers to fuel its budget.

So, each ride gets a $6.80 subsidy on top of the paid $1.85. Each household pays $278.70 for this extravagant “field of dreams”, liberal-dictated, social experiment. The transit budget could easily cut $10 million by trimming frivolous or marginal routes from its $223-million operating budget – a savings of almost 5% of the town’s entire operating budget.

Waste doesn’t stop there.

Most buses now have tinted “environmental” windows. Is the real reason to block the public from seeing the “missing” riders? Because there are so few pickups and drops, buses are parked with engines running all over town. Drivers dawdle to keep on their route schedules.

Oakville Green, which lobbied with suspected provincial support, thinks idling buses carrying no people is good for the environment.

It gets even worse.

Oakville’s council has pushed for many years for a new bus maintenance facility, budgeted to cost $45 million, to be shared equally by the three levels of government. Some are calling for $55 million, with the spillover entirely to Oakville’s account. They are building it now. With a little tweaking, it can service a 250-bus fleet. Unbelievable, but this again creates more jobs!

All these jobs support a false economy based on empty buses running routes for handfuls of people and politicians’ egos.

This is an example of the infamous “infrastructure spending” being downloaded to municipalities all over Canada.

London, Ont., has about 150 buses which carry 22 million riders a year. That is efficiency. The subsidy is about a buck per paid ride.

The 104-member Canadian Urban Transit Association, of which Oakville Transit is a member, ranks municipal performance. I was told I had to get the data from Oakville with a snicker.

Oakville has relied on wild forecasts and input from its administration, consultants and biased citizen surveys. Elected-asses are well-covered while citizens are in deep, having been walked down a plank.

This should never have happened.

And now that Oakville’s built its Rolls Royce bus system, good luck trying to undo the excesses.

– John Scheel is a semi-retired businessman who is completing a book on government waste and inefficiency inspired by his findings in Oakville, where he resides

Link to Toronto Sun article: http://www.torontosun.com/comment/columnists/2011/02/28/17443911.html


The Crunch of the Turnaround

March 12th, 2011 → 11:23 am @

The “Crunch of the Turnaround” is dated 1981. It’s old in a time sense but could have been written today. People were at the root of most problems of organizations then but usually because they were over their heads. Today, throw in a higher proportion of people with self serving goals, greed and ambitions and you have situations that are more difficult to identify, expose and fix. In the case of governments, they rely on the momentum of trust to carry them along. They do not recognize that real trust eroded long ago. People, voters, taxpayers and others have yet to work out how to fix governments because all elected representatives do not want to recognize problems and make changes which threaten their jobs.