MONDAY, MAY 28, 2012
The Royal Canadian Mint is penny wise and pound foolish. Oops, sorry! The Canadian penny is on the way out. That's another story, though. The focus of this piece is the 2012 one dollar coin (commonly known as the "loonie") and the two dollar coin (commonly known as the "toonie"). With the intention of saving money, the Mint has produced lighter coins. According to the Canadian government's official newspaper,the Canada Gazette, the new coins will save an estimated $16 million dollars a year. That's not chicken fodder. It's a sizable sum, but it comes at a tremendous cost to the vending machine industry and a terrible inconvenience to the public.
The 2012 coins are lighter and cheaper to produce because they are composed of multi-ply plated steel. The problem is that vending machines have to be adjusted to accept this difference in weight because they are sensitive to even the slightest change in a coin. It will be extremely expensive to reprogram so many machines across the country. The Canada Gazette estimated that there would be a one-time cost of $40 million to the vending industry. Remember that that is only an estimate. The real cost could be much greater. No wonder vending machine operators are so upset! Welcome to their nightmare!
Expect many vending businesses to lobby the government for compensation. Who knows how much that will cost taxpayers if the lobbyists are successful! That's not the end of this mess either. Contrary to what the Canada Gazette says, it's not really just a one-shot deal for the vending industry. Vending machines will also have to be adjusted in November when the new $20 polymer bill is introduced and again when new $5 and $10 bills arrive in 2013.
The Canadian public is also paying the price for the government's decision to produce lighter coins, Canadians were not given fair warning that this was going to happen. It was just foisted upon them with very little publicity. Many did not understand why the parking meter was not accepting their coins. When I tried to purchase a newspaper from a newspaper box, I discovered that all my loonies were of the 2012 variety and could not be used.
Don't get me wrong. The lightness of the new currency is most welcome. A surfeit of heavy coinage in a purse or wallet is burdensome. That was one of the reasons that I was not too pleased when the one dollar bill was replaced by a one dollar coin in 1987 (Yes, folks, it's been 25 years since the introduction of the loonie).
When the loonie made its debut, I argued that it would debase the value of a dollar. Coins are thrown in drawers and left in pockets, I maintained, while bills, on the other hand, are tucked safely in wallets. My other concern was that vending machine prices would increase. Yet I realized that the introduction of a one dollar coin was inevitable because the government needed to save money and coins last longer than bank notes.
A quarter of a century later, my opinion on that matter has not changed. I do admit, however, to a grudging affection for the loonie. It's so purely Canadian. What other country would nickname its one dollar currency a "loonie?" The loon design, however, happened by accident. The original design on the one dollar coin was intended to be the traditional Voyageur canoe. Somehow, on the way to the Mint in Winnipeg, the dies were lost. To avoid future counterfeiting, the Voyageur dies were discarded and replaced with a loon.
- Joanne
The last thing I want is a cashless society.
ReplyDeleteAs an American, I actually envy Canada's replacement of the 1-dollar note with a coin. At least Canada doesn't seem to be afraid to admit that its dollar's purchasing power has eroded for decades; I have yet to see this same humility in the USA.
https://internationalman.com/articles/whoever-does-not-respect-the-penny-is-not-worthy-of-the-dollar/
Not only would replacing a bill with a coin save money, as coins last way longer than bills, but it would also mean that coins could finally be worth something again. Thanks to inflation, what once cost a quarter decades ago would nowadays cost a whole dollar or two today. The introduction of the loonie was a way to keep up with inflation, if not address it.
Examples:
* Here in the USA, if I insert a $5 bill in a typical vending machine and buy a 20-ounce (591 ml) bottle of soda for two bucks, there's a chance that I'd get twelve quarters ($3) in change (vending machines that support $1 coins are rare). If the American govt. were as competent as the Canadian one in this regard, I'd get three coins in change instead of twelve.
* This past year, I was at a laundromat, and the lowest price for a small load cost $4. Would you rather pay that much with 16 quarters, or two toonies?
* Those mechanical vending machines that sell cheap stuff like gumballs and capsule toys take only coins. Some of these trinkets sell for a whole dollar, which requires you to put in four quarters. Having a single coin of that same value (the loonie) makes the job easier. The toonie also allows for more expensive objects, such as whole packs of chewing gum, to be sold in these machines with just one single coin; no electricity required.
Regarding the switch from nickel to steel, I believe it should only be done if it no longer becomes financially feasible - that is, if the fluctuation in nickel prices really happens and it starts to cost more than their respective face values. If the original nickel formulae could generate profits, especially given the face value of the coins themselves, then there is no reason to switch to steel to begin with.
My five cents' worth.