The article was prepared by Archie S., who joined our team recently during his Year 10 work experience. We think he did a great job – how about you?
In a previous post we discussed the doing away of the penny by the Canadian treasury due to increased production costs and it seems that Australia’s own five cent coin is facing the spotlight for the same reason. Today, the five cent coin makes up $198 million worth of Australia’s hard currency, but is this humble coin still a valuable part of Australian currency or has it overstayed its welcome?
One of the main reasons for the debate is the market price of copper and nickel. Fluctuations in the two raw materials that are used in making the five cent piece can drive the cost higher than the actual face value of the coin! In some ways, these low denomination coins are also becoming irrelevant in our day to day lives; with scarcely any items in retail stores priced at five cents – and most vending machines and parking meters no longer accept the coin!
People find the masses of small change in their wallets annoying and unnecessary, even more so as more and more transactions these days are performed electronically. Similarly, back in 2006, New Zealand dropped the five cent coin from their currency, whilst also reducing the physical size of all of their coins thus fixing that excessive change issue. Many people now believe Australia should follow suit, including Deakin University marketing professor David Bednall, who says that the nation could easily adapt to living without the five cent coin.
Australia’s Assistant Treasurer Shorten is hesitant about the decision however, as he realises how this change would affect charities – the main recipients of 5 and 10 cents coins as donations. Organisations such as ygap – organisers of the charity http://www.fivecent.com.au/ – base entire donation drives around the 5c piece. The change would also potentially affect the retail world, changing the way we round numbers in prices, most likely to the system in New Zealand (1,2,3,4 –round down & 5,6,7,8,9- round up). Store owners fear a consumer backlash over perceived price increases.
Finally, the smallest coin in our pockets has also found its usefulness around the house. If it is discontinued, how else will we open the backs of our fiddly electronics or scratch our lotto tickets?
The last time Australia dropped a denomination was the 1 and 2 cent counts in 1992. Is it time we take the next step and drop the five cent coin too?