‘They will die’: End of the 5c coin
"Over time they will die naturally."
So spoke Australia's coin-boss last week, heralding the eventual end of Australia's 5c and 10c coins.
Royal Australian Mint chief executive officer Ross MacDiarmid spoke on ABC Radio on Thursday and told Australians to get ready for the eventual loss of our smallest coins. Demand for coins has roughly halved in the past five to six years, Mr MacDiarmid said.
"There's no doubt there has been a significant decline in demand for circulating coin over the last five to six years. Decline in demand for coins of roughly 55 to 56 per cent," Mr MacDiarmid told ABC Radio in Melbourne on Thursday.
That makes sense. Given how often I seem to tap my payment cards these days, I'm surprised the fall in use of coins isn't greater.
But it turns out some coins are still well-loved. The two-dollar coin, one-dollar coin and the twenty-cent coin all hold a place and our wallets and our hearts. We are tired, however, of the 50c coin, the 10c coin and especially the tiny 5c coin, Mr MacDiarmid said.
But the Royal Australian Mint will not force the end of the two smallest coins, one bearing the echidna and the other the lyre bird. Instead it will let them fade away, "naturally."
Is it too soon to get rid of the 5c coin and 10c coin? My feelings say no, but this next graph says we might be jumping the gun.
The graph shows the way inflation is eating away at the buying power of the 5c coin. That will continue forever. But the surprising thing is this. The 5c coin is still worth more than the 2c coin was in 1992 when it was withdrawn. And it is worth far more than the 1c coin was worth in 1992.
By this metric, we should keep the 5c piece until at least 2031. But of course cash was much more commonly used back in 1992. These days, it might make sense to take coins out of circulation before they become utterly pointless, and cost more to make than they're worth as currency.
IS IT EVEN WORTH MAKING THESE COINS ANY MORE?
The 5c coin has at certain points in its life been worth more in raw metal before it gets minted.
The coin is made of 25 per cent nickel and 75 per cent copper. When the price of either metal shoots up, the 5c coin can actually be worth more as metal than money.
In recent times though, global metals markets have been quiet and you're better off leaving the mint's hard work intact. (Also, by the way, melting down coins is a criminal offence!)
The value of a 5c coin in metal terms can be seen in the next graph. Nickel is worth more than copper, so even though the tiny coin is three-quarters copper, a decent part of its value comes from nickel.
The 5c coin weighs 2.83 grams and is worth just a bit over 3c. Because the 10c piece is exactly twice the weight of the 5c coin, we know it is worth just over 6c. And the 20c coin is twice the size again, so we know it is worth 12c in metal terms.
These coins, most Aussies agree, are no good. Low in value and high in weight, they are a terribly inefficient way of carrying money around. A bunch of silver will bust your wallet long before you have enough to buy a drink.
As every Australian knows, there is only one coin with a truly good weight-to-value ratio, and that is the two-dollar coin. Finding a $2 coin still means something. To illustrate this, a kilo of $2 coins is worth a whopping $303, while a kilo of 5c pieces, 10c pieces or 20c pieces is worth a miserable $17.60.
CASH IS CRUCIAL
The eventual loss of our smallest coins is just a by-product of inflation. They'll go the way of the 1c piece, and the halfpenny before it, and the farthing before that. I won't mourn them, and I won't miss them. But that doesn't mean I turn my nose up at cash.
In an era when it is ever easier for governments to watch our every move, the ability to pay in cash is a sort of civil liberty. Anonymous payments let us go about our business in privacy.
While I have no reason to fear the government now, history tells us that suspicion is always in order, because bad governments who treat their citizens harshly do keep cropping up.
The government has already cracked down on cash payments more than $10,000. That was for perfectly good tax reasons. But taking the crackdown on cash too far is something we should resist.