Hayley North: Time for a leap of faith

We need to talk about money.

It’s a commonly-known fact that in this part of the world, we are more comfortable talking about sex than we are about money. It isn’t hard to see that we are a long way off our French neighbours’ comfort in that regard and it is therefore very fair to say we really, really don’t like talking about money.

It is at times like this, with the entire island and its respective deputies polarised into two distinct camps – to borrow or not to borrow – that an ability to talk about money calmly and rationally is extremely helpful and it is clear that we are struggling.

It is hard to think about money, or anything for that matter, without applying our own experience. We learn about money from our parents or those who influence us growing up and from our own experience.

Some of us manage to lose those habits and develop our own as we get older but all of us feel the pull of our upbringing when it comes to judging both our own and others’ behaviour with money. If we or our parents have had a nasty experience of borrowing, we hate borrowing. If we or our family invested and took our money out at the wrong time, we fear investing. If we or a close friend got ripped off by an unscrupulous person or business, we are naturally fearful of getting involved.

I have been talking to people about money for my entire career. I started out talking about larger sums of money in my banking days but for the last two decades I have talked to normal people about normal amounts of money and how they can use this money to build a secure retirement, care for someone who is sick, buy a home, change their career or help their children.

I have seen clients divorce over differences of opinion in relation to money. I have seen children spend their inheritance in a heartbeat. I have seen families at war over money and frankly it just is not worth it.

These discussions, with someone who can suspend their own views while discussing personal financial situations, are life-changing. Not just for my clients but also for me as I have been privileged enough as a financial planner to have an insight into people’s lives that few can match.

Almost every client I have spoken to has not spoken about money with anyone close to them nor would they dream of talking about money socially or at work. Learning about and exploring their approach to money in a safe space has been liberating.

Sadly, I have the same issues as everyone else when talking to family members or close friends about money, they don’t want to do it and misinterpret it when I try to bring it up. I really wish we could change this.

Not only does talking openly about money make it easy to manage and understand, it takes away the shame of not having any, of not having enough, having too much or needing help to work out what it all means. The more we are open about it, the less it maintains its mystery and power over us.

The most notable exception to the rule of talking about money are my Scandinavian friends. My Swedish and Norwegian friends can discuss money calmly, in a practical and non-emotional way and without judging one another. This is a huge cultural benefit. In Norway, it has been possible to look up anyone’s tax return since the 1800s. These are released in October each year and you can find out how much someone earned in total and how much tax they paid, even if they are the prime minister. If you are looking up your neighbour’s income though, they will know about it as the tax office will email them to let them know. This was an additional feature added in 2014. The media, however, has full access and Norwegians attribute their much fairer pay structures to the free access to this information. It ensures fair pay for the same work and means that there is a much smaller gap between those earning the most and everyone else. It also takes away a lot of the mystique.

Now I am not suggesting this is the way forward for Guernsey but based on how much confusion and panic there is right now about some essential borrowing to build essential services, I think we need to do something to open up our discussions about money. There are too many people who are uncomfortable asking for things to be explained to them and too many who are making decisions based on fear rather than facts.

We are currently considering long-term investments for the island and if we wait to start this work, it will cost us more and continue to hold up further progress for years to come. Borrowing for capital expenditure makes sense in accounting terms and this is something we would all benefit from understanding. For anyone who is less familiar with accounts, in very simple terms, the cost of assets (such as a school or hospital) is spread over their lifetime and it makes sense to spread the actual cost over the same time period, leaving most of our reserves intact and able to grow when investment markets recover.

Without a healthcare policy that progresses and continually improves and without major changes to our education system, we can forget our independence longer term and my generation will have more to pick up than a bill for loan interest. There is no direct line between the new projects and revenue but there is an indirect one. With better facilities we will both attract and keep people on the island, we will be better able to train our own children and these things will help to generate growth, not least while they are being built. To say the proposed borrowing is ‘unfunded’ is therefore rather misleading.

I understand more than many that borrowing money feels scary but we have cash available on an ongoing basis to cover this cost. We can afford to run a deficit for a while yet and this is common practice elsewhere in periods of low growth. We just need to make a decision now and get on with it.

If in coming months and years, the situation remains as it is and we need to generate more income to cover our ongoing expenditure – which is different to expenditure on capital projects – then it will be for the next States to make those decisions. There are ways to painlessly generate additional revenue to move things forward in the short-term and the debate in the assembly this week will begin with that very discussion.

Making big changes to our own finances is best done step by step, making decisions and then getting comfortable with the changes and seeing what happens before making more decisions. We have some time to get used to borrowing and to test any new corporate levies before we have to leap into other forms of taxation. We have time to consider our costs and what we should all be getting for free longer term, and we all have a role to play in that discussion, but rushing this now would be a big mistake. We have to do one thing at a time and we have to do the most pressing thing first.

It’s time for a leap of faith and it really is not as scary or reckless as it seems.