Thursday, April 3, 2008

Time to get rid of the Penny

Is it time to scrap the penny?
New Democrat's bill calls for elimination of the Canadian penny
April 03, 2008

in Ottawa

in Toronto

A Winnipeg MP says the penny is an "expensive nuisance" and should be scrapped this year.

"The penny is of no commercial value, it does not circulate and costs more to produce than it's actually worth," said New Democrat MP Pat Martin (Winnipeg Centre), who introduced a private member's bill yesterday calling for the penny's demise by 2009.

"There is no business case for continuing to produce the penny. Making cents, in fact, makes no sense at all," he told a press conference. He said his bill includes a formula to round off prices to the nearest nickel, which he insists will be revenue neutral.

Getting rid of the penny – there are an estimated 20 billion of them, or about 60,00 tonnes, in circulation in Canada – has been talked about before, but Martin said recent studies suggest the penny has outlived its usefulness.

Although the Royal Canadian Mint says it costs 0.8 cents to make a penny, Martin said that just covers the metal. Add in labour and the cost of hauling the coins around and it comes to more like 4.5 cents each.

A study done in 2007 by the Desjardins Group, a Quebec finance company, estimated keeping the penny was costing $130 million a year in production, storage, transportation and other expenses. Of the estimated 1.2 billion pennies minted each year, Martin says most end up in drawers, jars and tins.

The penny, at one time almost pure copper, is now 94 per cent steel, 1.5 per cent nickel and 4.5 per cent copper-plated zinc.

Other countries have already moved to eliminate the one-cent piece, including Australia and New Zealand.

"They managed to cope quite well and, in fact, they have introduced a rounding formula and my bill will also recommend to take care of what we do with the odd number pricing," he said.

Martin said this year marks the 100th anniversary of the domestic production of the Canadian penny and "we believe at the same time we have a birthday party for the penny we should have a funeral." Before 1908, all Canadian coins were minted in Britain.

Premier Dalton McGuinty added his voice to Martin's private member's bill. He said Canadians want change by getting less change in their pockets.

"I just think ... a penny ain't what it used to be," he said yesterday.

"I think that we've got so many retail sectors now there are opportunities, the `take-a-penny, leave-a-penny' type of thing," he said, noting the coins are so worthless people give them away.

"Go talk to cashiers and ask people how eager they are to receive and to deal with pennies. I just think a nickel is more practical."

Federal Finance Minister Jim Flaherty said getting rid of the penny is not on his agenda.

"It's not a priority for us now. We do review that. We look at the penny and see whether something ought to be done. But not right now," he said.

With files from Les Whittington

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