JOHN STANLEY:
The Assistant Minister to the Treasurer is Alex Hawke, who joins us now. Alex, good morning.
ALEX HAWKE:
Good morning.
GARRY LINNELL:
Alex thanks for joining us. Are you a fan or do you loathe the five cent piece like me?
ALEX HAWKE:
Well I think we've got to look at this issue, obviously some people remember the one and two cent piece quite fondly. I still remember using them for little bits and pieces at milk bars and things when I was growing up. Now we melted down all of them and turned them into bronze medals for the Sydney Olympics.
The view was you weren't able to buy anything with a one or two cent piece by the time they went. And we're getting close to the point where the five cent piece doesn't have a lot of utility as a coin. You can't use it at a machine, you can't spend it on any goods and services, and it actually costs more to make them than the cost value of the coin. So that used to be about eight cents, but with commodity prices falling that's come down to about six cents, but you know, it's got a doubtful future I'd say.
JOHN STANLEY:
It's interesting though, because if you go to the United States or Europe and they still have one cent pieces. So why can't we sustain a five cent piece?
ALEX HAWKE:
Well we don't have to be just like Europe. One of the most annoying things I find about Europe or even Japan is that in these places you go you end up with handfuls full of coins that really have little value.
I think it's really interesting, the point you made about how half of the payments made in today's economy are now cashless. So 50 years ago we have the introduction of the decimal system, that's why we're even having this conversation today – they're bringing out a lot of commemorative coins this year. And after 50 years 50% of transactions are now cashless, there's no coins. So you think about what will happen in 20, 30, 40, 50 years from now, and I think there's going to be less and less need for coins.
GARRY LINNELL:
Now we will be having this same conversation about the $20 note, presumably by then.
ALEX HAWKE:
Well I think there's always going to be a role for cash in the economy, but look society's moving and shaping in a way that you couldn't predict 10 years ago, so it's not all bad when you think about it. I mean, Paywave. All of us love it in shops with transactions under $100 just being able to wave our card with no cash or need to remember pins. So you know, there's a lot of benefits as well.
JOHN STANLEY:
If we, you know, took away the five cent piece, would prices go up, do you think?
ALEX HAWKE:
That's one of the reasons you've got to be careful when you do it, you don't want to create an inflationary effect on prices. Obviously with half of transactions being cashless (in the future) that not ought to apply anymore. The more you rely on non-cash, the less there should be an excuse to lift anything by a few cents. Of course you've got to watch out for that, and phase it out over a bit of time, so that it doesn't actually have an inflationary effect. Inflation is really very low at the moment, so there is a good window over the next few years to do this.
GARRY LINNELL:
Is there any work – I'm sure someone's done some work – or is there any way of knowing the proportion of transactions that are rounded up as opposed to rounded down? You'd assume it'd be half and half.
ALEX HAWKE:
Yeah, that's something I don't know. I think that's something which is very variable by sector and obviously the costs of production and things like that. You know, it's obviously not going to happen this year, we're actually bringing out commemorative because of the 50th anniversary of decimal currency. So you're able to collect coins this year, the Mint's just bringing them out, which reflect all the old pounds, shillings and cents. You won't see the five cent disappear anytime soon.
GARRY LINNELL:
All right, Alex Hawke, thank you.
ALEX HAWKE:
Thanks guys.