Five Cents Makes No Sense

Picture this, you park on the street in the city and you're looking for change to pay your ticket. You dig through your purse/wallet, scourage the floor of your car and then make way to your car's ash tray which is your favourite place to hoard your coins. You think you have the right amount, mostly in 5c pieces. As you stare at the parking machine it says it doesn't accept 5c coins and you just lose the plot...well not really, but surely you're fustrated.

In 1993, Australia's 1c and 2c were demonetised and taken out of circulation and led for totals to be rounded to the nearest five cents (known as the Swedish rounding system). Contrary to popular belief at the time, this did not lead to a spiral in inflation. A study by the University of Melbourne (http://www.scc.ms.unimelb.edu.au/whatisstatistics/coins.html) stated that 95% of shopkeepers will lose or gain no more than 88 cents (in a sample size of 1000 transactions over five shops), 1.15% will only stand to lose/gain more than a $1 and 0.06% would have losses/gains of more than a $1.50.

I guarantee most of you are thinking why do we still have this piece of shrapnel. We can't use them in parking machines, vending machines or even those little lollies at your local deli!

Put it in this perspective, your average package of chips has about 34 chips inside, it retails at $1.70, hence the cost is 5 cents a chip. That is how little it's buying power is now! Compare that to 1966 when the cost of a postage stamp is 6c, now it is 60c hence in the last 44 years, the buying power of our dollar has weakened to the factor of 10.

The five cent coin weighs 2.83 grams, made out of 75% copper and 25% nickel. The copper value of the coin is 1.67 cents and the nickel value is 1.59 cents hence the material cost of a 5c coin is 3.26 cents and that's without taking into account labour and transportation costs! Between 1999 and 2006, at least 1.4 billion coins have been minted to the face value of $70 million! That's $70 million dollars going straight to bottom of purses, drawers, ash trays and large water features which 'bring luck'.

I don't bother anymore in using my 5c coins, I hoard them at home, put them in those bank bags and when I fill enough of them, they go to the bank and straight into my account. Last year alone, I deposited 400 ($20 worth) of these nuisances which was enough to have a decent lunch somewhere in Leederville.

I think it's about time we got rid of this piece of metallic wastage. New Zealand thought so when they got rid of their 5 cent coin in 2005 and there was no huge jump in prices or inflation. Recently the Royal Australian Mint in Canberra unveiled their new refurbishment to the public, it features a staircase adorned with 5 cent pieces. You know when that happens, it's not worth using anymore.

So I urge you not to return your 5 cent coins into circulation and rather continue hoarding them as you do and deposit them. In the meanwhile, keep a look out for some rare 5 cent pieces. These are the ones minted in 1972 (worth $35 uncirculated) and those minted between 1966 and 1969 ($6-8 uncirculated).

Really, five cents makes no sense.