You can’t use them in parking machines or many vending machines these days, but the future of the five-cent coin is actually in good hands as people hoard low denomination coins during tough economic times, according to the Royal Australian Mint.
And despite moves towards a cashless society, and people being urged to use cards instead of coins during the COVID-19 pandemic, Mint CEO Ross MacDiarmid said people are holding on to their coins instead of spending them which is increasing demand.
“We’ve actually seen an upturn in demand for the five-cent piece during this financial year,” Mr MacDiarmid told Region Media.
“The reason, we think, is that in tough economic times, people tend to revert back to using something they’re familiar with, which in this case is cash. People are receiving more change and they tend to be putting those coins away, so there’s ongoing demand from the business community and retailers for five and 10-cent pieces in particular,” he said.
Mr MacDiarmid said commentary from some economists this week that the Mint in Deakin is phasing out the humble five-cent coin is unfounded.
The biggest threat to the future of the five-cent piece is actually the cost of nickel, which means the cost of producing a single five-cent coin is around four to six cents.
“If we had a coin that cost significantly more to manufacture than its face value, then clearly that would bring into question its ongoing viability, but that doesn’t apply to any of the coins we produce,” he said.
“The cost varies from 4.5 cents up to six cents depending on the price of nickel.
“The demand for five-cent pieces has been progressively falling for the past five to eight years quite significantly, but our recommendation to the government has always been that we really don’t need to make any decisions because, over time, the coin will progressively not be used.
“The point that needs to be made is that if demand for a coin like the one and two-cent piece actually diminishes, then it basically stops being produced. The one and the two-cent piece has never been demonetised, it still theoretically can be used but we just don’t use it anymore and it’s stopped being produced,” he said.
Recent research conducted by the Mint found people were concerned that coronavirus and other viruses could be spread via coins, but people had responded by washing their hands more regularly.
“We also contacted the banks and their advice to us was that they would still be making orders for all of the lower denomination coins, which suggests to us that people are receiving their change from a transaction but they are putting these coins away.
“I’d expect to see those coins come back into circulation once we get back to a normal environment, and subsequently, I’d expect the demand for these coins to also decline once again.”
Mr MacDiarmid said there won’t be any recommendation to phase out the five-cent coin in the short term.
“If we produce 15 million five-cent coins, the saving from not having that coin in the marketplace is so insignificant that it’s just not worth the exercise of phasing it out.”
In 2014, around 76 million five-cent coins were minted, while in 2018 there were 25.1 million coins made. The partial figure for 2019 is 17.11 million (the final figure will be announced in the Mint’s 2019-2020 annual report).
Of far greater demand has been for the Mint’s collectable and bullion coins by numismatists.
“Demand here has been way beyond anything we’d expected because people are looking for value and something to hang on to. We’ve seen the level of demand increase by anywhere between 10 and 15 per cent, especially for gold and silver coins,” Mr MacDiarmid said.