Australia's 5-Cent Coin to be Scrapped|
July 13, 2009
"Australia's most shunned shrapnel" is the way the circulating 5-cent coin was recently described by one source. The Royal Australian Mint is preparing to abandon the denomination, due to its cost exceeding its face value, despite outrage being reported by consumers over the move.
Australia has previously ceased issuing the 1- and 2-cent denominations, while extending its coin denominations as high as $5 at the expense of bank notes of the same value. All these have been cost saving measures as the expense of making coins and bank notes continues to soar. Neighboring New Zealand abandoned its 5-cent coin in 2006 for similar reasons.
Each time a low denomination coin has ceased to be issued for circulation, Australian merchants have responded by rounding up prices, causing inflation in the process. This reaction is true not only in Australia, but all over the world. This is one of the arguments the United States has used for continuing to issue the 1 cent denomination.
Australian Retailers Association Executive Director Richard Evans told NineMSN that retailers would welcome the change, saying: "There is nothing in the marketplace that requires a 5-cent piece - For example - even vending machines don't take them."
According to a May 25 NineMSN report, "He [Evans] conceded that retailers would be forced to round-up or round-down their prices to the nearest 10 cents. However, he said he would not expect it to affect inflation." I guess Evans has never been in Rome, Italy, where everything has been rounded up to the 1 euro denomination, ignoring all euro cent denominated coins and values.
Evans told another news agency that many retailers found the small coins to be what he termed to be a "menace" to handle and would support the move. Evans acknowledged the change would complicate pricing policies, and retailers would need some direction, perhaps from the Australian Competition and Consumer Commission, on whether they should round prices up or down, adding: "As long as it doesn't provide any burden in terms of costs for retailers they'd probably support it."
Evans is apparently not a politician, since he crassly added, "The only people it will probably affect is money boxes for children."
According to the publication The Age, "The plan to ditch the 5-cent piece follows the scrapping of 1 and 2-cent coins in the early 1990s. Federal Treasurer Paul Keating said then that the cost of minting the copper coins far exceeded their value, and they had lost their real purchasing power."
Keating was quoted at that time as saying, "Many people regard them as a nuisance - millions of these coins drop out of circulation each year."
The Age added, "Prices began being rounded to the nearest 5 cents for cash transactions."
Although the RAM attempted to keep the news of the demise of the 5-cent coin under wraps it has been no secret the mint staff has been working for months on a redesign for all circulating Australian coins. This is to include a new image of Queen Elizabeth II, who has to personally approve the design before it can be used. The Ian Rank-Broadley portrait of the queen has appeared on the obverse, with the echidna on the reverse of the 5-cent coin since 1999.
Minister for Superannuation and Corporate Law Nick Sherry has the jurisdiction regarding if the RAM will continue to produce 5-cent coins or not. A spokesman for Sherry recently tried to circumvent acknowledging the change was on the way, telling NineMSN: "Any decision on the future of the coin is a government policy matter. There is no policy to dump the 5-cent coin."
The May 22 WAToday reported, "The move - which many retailers support - could upset some consumers, with all transactions needing to be rounded to the nearest 10 cents."
Choice spokesman Christopher Zinn told one source there was no doubt some people would welcome a decision to scrap what he called the "inconvenient" coin, but the real question was what impact would it have on prices.
Zinn said, "And if you tell people the prices would be rounded up by 5 cents I'm sure they would be far more reticent in terms of seeing an end to it." He continued, "A lot of prices are already $2.99 rather than $2.95 so one could be forgiven for thinking that the temptation is far more to round up than round down."
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