The Australian coin system is all wrong. The weight and bulk of our coins is disproportionately high, to the extent that some are worth over half as much as raw metal.
The 5-cent, 10-cent and 20-cent coins, which have a value of just $17.70 a kilo, are the worst offenders.
The economic damage wrought by Australia’s hefty loose change situation is serious, and I offer as exhibit A my old wallet, which had to be held together by electrical tape after the coin section busted its stitching.
But it’s not just purses, wallets, and pockets being busted by heavy coins. Think of the petrol cost as armoured vans deliver tonnes of change around the city, especially to big coin users like supermarkets, pokie venues and public transport ticket machines.
Even the Royal Australian Mint is at risk if copper prices rise. Copper represents 75 percent of our silver coins and 92 percent of our gold coins. The profit (seigniorage) that the mint makes on selling coins to the RBA was a not-insignificant $96 million in 2012-13. It would be crazy to put that upside at risk for the sake of big fat coins.
During 2011, it looked like our coins might soon be worth melting down.
The solution to these problems is obvious. Smaller coins. We have the answer in front of our noses, in the shape of our $2 coin, whose outstanding value-to-weight ratio makes it the Bradman of coins.
The $2 coin is the only one you’re actually pleased to find in your wallet. Introduced in place of the two dollar note in 1988, it’s worth keeping around. You never take a handful of them and dump them into a jar.
The Canadians call their $2 coin a Toonie, yet for some reason, this nickname-mad nation has yet to come up with a diminutive for our Mighty Two.
If we want to try to make our coins a bit more like the Mighty Two, we need not look far afield for a model. In 2005 New Zealand got rid of 5¢ coins and changed its 10¢, 20¢ and 50¢ coins from copper and nickel to plated steel. Their new coins are much smaller and much lighter than ours.
Businesses who have to heft big bags of change back from the banks would welcome the change – you might imagine only the vending machine industry would object. But even they are increasingly moving towards electronic payments, because the industry wants to cut costs by diminishing the frequency with which it collects coins from its machines.
The argument for smaller coins is a simpler one than the argument for getting rid of the smallest denomination.
If you try to get rid of the 5-cent piece, everyone gets up in arms about supermarkets rounding up the price of things to the nearest ten. Never mind that this argument doesn’t hold water. It’s what keeps the pennies circulating in the US, and 5-cent pieces in Australia. The case for smaller coins is much simpler.