Monday, May 28, 2012
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.