It will still rain pennies from heaven and senators can still walk into the Red Chamber wearing penny loafers but the future of the once-cent coin needs some sober second thought, apparently.
Conservative Irving Gerstein successfully proposed that the Senate national finance committee look at the usefulness and cost of the penny to Canadian taxpayers.
“Why do we need to study the penny?” asked Mr. Gerstein, who is a long-time fundraiser for the Conservative Party. “Many would argue the penny has simply outlived its purpose. It’s a piece of currency which lacks currency.
“In fact, a penny cannot even buy a penny anymore. It costs far more than a cent to produce and distribute each penny.”
Mr. Gerstein also said there are costs to simply having to accept and hand out the penny as “employees must be paid more than the penny for extra time it takes to handle each penny.”
The Senator joked with his colleagues that this is “no ‘penny ante’ issue.” However, he said he is not biased against the penny as there are merits to the coin and there are costs associated with getting rid of it.
Consider the expense to retailers who would have to recalibrate their cash registers, says Mr. Gerstein, who noted, too, that after-tax totals would have to be rounded off to a multiples of five cents. “The overall effect on price levels must be considered.”
Other countries, including Britain, Australia, New Zealand, Israel, Sweden, Norway and Demark, have gotten rid of their lowest currency denomination.
“I want to reassure all honorable senators that this study will be quite focused,” Mr. Gerstein noted.
“The committee will not stop honourable senators from earning or spending a pretty penny … Unfortunately, you can no longer trade them for a package of sunshine and flowers because, under the Currency Act, no florist or party to any transaction is obliged to accept the payment of more than 25 cents in pennies.”
The motion for the probe, meanwhile, passed although senators don’t want to discuss any issue involving “abolishing anything,” noted Senator Joe Day, the chair of the finance committee.
So here are the terms for their examination on the penny’s future, which must be completed by December 31, 2010:
“That the Standing Senate Committee on National Finance be authorized to examine and report on the costs and benefits of Canada’s one-cent coin to Canadian taxpayers and the overall Canadian economy;
That in conducting such study, the committee take particular note of:
a) The recent cost-saving changes to Canada’s currency system announced by the Royal Canadian Mint;
b) The direct cost to taxpayers of producing and distributing one-cent coins in relation to their actual value;
c) The costs and productivity implications for Canadian businesses in light of the counting, handling and redistribution requirements of the coin; and
d) International experiences with eliminating low-denomination coins; and
That the committee submit its final report to the Senate no later than December 31, 2010, and that the committee retain all powers necessary to publicize its findings for 180 days after the tabling of the final report.”