Love it loathe it, Australia’s humble little 5 cent coin appears imminently destined for the numismatic scrap heap after the head of the Royal Australian Mint told a Senate estimates hearing that the nation’s smallest piece of legal tender costs more to produce than its actual face value.
The head of the Commonwealth’s Canberra coin factory, Ross MacDiarmid, has told a Senate Estimates hearing that it now costs six cents per piece to produce a five cent coin, a statistic that partially explains why the Abbott government appears keen to sell the facility off.
Mr MacDiarmid told the hearing that although there were around five billion coins “in circulation at any one point in time” the Mint still produced 255 million coins a year – literally small change by international standards.
“It is actually in decline, which is why it is probably an appropriate time for us to be doing a review,” Mr MacDiarmid said.
“Because, quite frankly, if our core business is in decline, this should be the opportunity for us to look and see what the next 10 years looks like.”
While Finance Minister Mathias Cormann has already sent the Mint’s potential sale off to a scoping study to weigh-up the potential revenue upside, the revelation that some coins cost more to produce than they are worth appears certain to prompt a rethink of the coin catalogue.
By any measure, getting rid of coins that now cost more to make than they are worth would be a logical step on the road to eventual privatisation because it would remove dead weight from the balance sheet.
Mr MacDiarmid said the Mint had submitted a proposal “for a review of the coin array for Australia, which includes looking at the 5c piece” but added that the assessment was “on hold at the moment.”
“It would also be subject to reaction from the marketplace—that is, consumers, banks and other stakeholders,” he said.
Senator Cormann was more forthcoming about his views on the value of the five cent coin, saying that “there is obviously some scope for improved efficiencies.”
Payment card schemes like MasterCard and Visa have for years pushed policymakers to embrace the notion of dumping cash and coins in favour of greater uptake of transactions like contactless tap-and-go payments for everything from parking meters to petrol.
However contactless cards typically need to be linked to some sort account to draw on, a hurdle that potentially excludes the so-called ‘unbanked’ and stands in the way of eliminating coinage.
Meanwhile, Australians’ propensity to somehow disappear a whopping 250 million bits of shrapnel a year is costing consumers and taxpayers dearly.
The Estimates hearing was told that it now costs $110 million a year to replenish the supply of coins in circulation, a figure that caused Labor Senator Sam Dastyari to marvel at how so much money made it “down the back of chairs and whatnot.”
Mr MacDiarmid offered that the coins could be “sitting in people’s drawers for long periods of time or in jars.”
Who would potentially stump up money for what is admittedly a declining business – or what value that could be returned to the taxpayer by doing so – remains to be seen.
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