Canadians may soon be unable to purchase one’s thoughts for a penny, as the government is considering eliminating the country’s smallest coin denomination.
The Senate authorized the Standing Senate Committee on National Finance in April to assess the costs and benefits of the one-cent coin to Canadian citizens, as well as the effects the penny has on the economy.
The committee is continuing to meet and is still discussing the possibility of eliminating the denomination for good.
Photo credit: steveleenow/Flickr.com
“Perhaps the key questions before us could be expressed as, ‘Is now the time to scrap the penny?’” said Irving Gerstein, deputy chair of the committee. “If so, what will be the consequences and how can they be managed?”
The question has been on the minds of Canadians for some time now, and members of Parliament have been trying for years to give the subject some serious attention.
The most recent campaign was launched by New Democrat MP Pat Martin in 2008, who attempted to introduce a private member’s bill that would eliminate the penny for good.
That bill appears to have been the impetus for the current series of meetings on the matter. One of the main reasons lawmakers are considering the move is the ongoing financial concern related to producing the penny.
Although the Royal Canadian Mint publicly states that it still costs less than a cent to manufacture a single coin (the most widely-used figure is 0.8 cents for every cent), reports are starting to show up claiming it actually costs anywhere from 1.5 to 1.8 cents to produce one penny.
Alex Reeves, spokesperson for the Mint, would not give actual figures, but did not deny that it currently cost more than a cent to produce a one-cent coin.
Reeves also stated that the Mint produced over 455 million pennies last year, which represents a decrease from last year’s amount, which he did not share.
A Royal Canadian Mint survey that was released in October 2007 suggests that 63 per cent of small retailers favour getting rid of the coin.
Many other countries have decided to get rid of their smallest denominations of currency, making the case for eliminating the penny here at home all the more feasible based on these examples.
- Eliminated one and two öre coins in 1972
- By 1992 had removed five, 10 and 25 öre coins
- Developed rounding system now known as “Swedish rounding,” in which all prices are rounded to nearest multiple of smallest denomination
- Swedish rounding used today in Australia and New Zealand, and is being considered for Canada after elimination of penny
- Production of one and two øre coins ceased in 1972
- Got rid of five øre coin in 1982 after size of coin was reduced in 1973
- Twenty-five øre coin also eliminated in 1982
- Last 10 øre coins minted in 1992
- Eliminated the one-cent of the guilder in 1980
- Ceased issuing one and two cents of Dutch euro coins in 2006
- Eliminated one and two cent coins in 1990
- Followed by five cent coin in 2006
- Got rid of one agora coin in April 1991
- Removed five agorot coin in January 2008
- Took care of one and two cent coins in 1992
- Stopped issuing one cent Brazilian Real coins in 2005
- Eliminated one and two forint coins in March 2008
Despite the fact that, according to the same survey, only 42 per cent of consumers who were polled said they want the penny gone, many Calgarians appear to be prepared to embrace the plan with open arms.
“I, for one, would not miss it,” said Yvonne Vandenbrink, an employee at Kanata Trading Post on Stephen Avenue.
“Have you seen how many pennies are just lying around on the ground? People throw them away and don’t think twice.”
Even the likely adoption of what’s called “Swedish rounding” – rounding all prices to the nearest multiple of the lowest denomination available, which in Canada’s case is the five-cent coin – doesn’t worry consumers.
“It really wouldn’t be that big of a deal,” said Mary Ching, who works at ARP Downtown Drugmart.
“I think people would get it and see it won’t be hard to get used to. People don’t like pennies.”
Frank Atkins, an associate professor in the department of economics at the University of Calgary, said abolishing the penny would be a relatively easy pill to swallow.
“Of course, there will be the short term reaction, where people will be confused and pissed off,” said Atkins. “But pretty soon after that, it’ll be business as usual.
“People agree the penny is absolutely irrelevant and a nuisance, so the backlash will be mild and swift,” he continued, adding there will have to be strict rules put into place in order to make the transition work, such as Swedish rounding.
However, other issues may rise to the surface, as the country gets closer to reaching a decision, which could change peoples’ minds about the apparent uselessness of the penny.
The primary case that could be made against abolition is the reliance of several charitable organizations on the coin. Many people are more than happy to get rid of their collection of cents in a collection box, which can usually add up to millions of dollars worth of pennies going to AIDS research and other concerns.
A spokesperson for both UNICEF and the United Way could not be reached for comment.
However, it’s noted in a 2006 article for the San Francisco Chronicle that the charity angle is a large reason for the delay in abolishing the penny in the United States.
Nevertheless, the verdict seems to be in: Canada is ready for a change. And no one appears to be more excited about the prospect than federal finance minister Jim Flaherty.
“I’m not sure how many of us as Canadians carry around pennies a lot,” said Flaherty during a media conference call in May.
“But what we are seeing is hoarding of pennies so the Mint has to keep producing pennies, as you say, at a cost of more than a penny. So at some point, this will have to end.”