Business & Personal Finance

Benjamin Franklin once said "a penny saved is a penny earned".  It has also been said "a penny saved is worthless".

Earlier this year, the Standing Senate Committee on National Finance has been authorized to examine and report on the costs and benefits of Canada's one-cent coin to Canadian taxpayers and the overall Canadian economy.

The committee is expected to submit its final report to the Senate no later than December 31, 2010, and that it will retain all powers necessary to publicize its findings for 180 days after the tabling of the final report.

Why do we need to study the penny?

According to the Hon. Irving Gerstein, "many would argue that the penny has simply outlived its purpose. It is a piece of currency that lacks currency. In fact, a penny cannot even buy a penny anymore."

The Hon. Irving Gerstein goes on to say "It costs far more than a cent to produce and distribute each penny. On those occasions when pennies are used in retail transactions, it costs the retailer because employees must be paid more than a penny for the extra time it takes to handle each penny."

"By some estimates, the production and use of the penny represents hundreds of millions of dollars every year in direct cost to taxpayers and lost productivity. "

The Hon. Irving Gerstein also realizes that "there will be costs associated with eliminating the penny, as well. Retailers would have to recalibrate their cash registers, after-tax prices would have to be rounded off to a multiple of five cents, and the overall effect on price levels must be considered. There might also be some effect on charity fund raising campaigns that collect coins."

In an article entitled Save the Penny or Leave the Penny?, CBC News stated "a growing number of economists and bankers are urging the Canadian government to give up the penny, as the U.K. gave up the farthing and, later, the halfpenny."

"Both Australia and New Zealand removed their one- and two-cent coins in the early 1990s.  New Zealand went a step further in 2006 and demonetized the five-cent piece, and Australia appears ready to follow suit."

According to a Royal Canadian Mint survey entitled The Future of the Penny in Canada dated September 2007, "63% of small retailers were in favour of removal, versus 19% against.  Consumers were more evenly split – 42% in favour, versus 33% against – but one quarter neutral."

The Desjardins Group, a Quebec finance company, has released various documents about the Canadian penny; i.e an economic study Should We Stop Using the Penny? and a press release Should We Say Goodbye to the Penny? both dated February 15, 2007 as well as another economic study 100th Anniversary of the Canadian Penny: An Opportunity to Re-examine the Usefulness of our Coins and Bank Notes in Circulation dated April 9, 2008.

For more information on Canadian currency or the history of money in general, check out the following books at the Toronto Public Library:

Eagleton, Catherine, Jonathan Williams, Joe Cribb and Elizabeth Errington.  Money : A History.  Richmond Hill, Ont. : Firefly Books, 2007.

Powell, James.  A History of the Canadian Dollar.  [Ottawa] : Bank of Canada, 2005.

Snodgrass, Mary Ellen.  Coins and Currency : An Historical Encyclopedia.  Jefferson, N.C. : Mcfarland, 2007.