In the previous article we looked at Norway and its discontinuation of their coinage. Now we are going to shift our focus to Oceania and look at how Australia and New Zealand ended their lowest-denominated coinage.
The Australian monetary system switched to decimal in 1966. Included in the decimal denominations were the one-cent and the two-cent coins. When the coins were issued in 1966, a newspaper ran between four and five cents cents, a postage stamp cost four cents, and small candies could be bought for between one to two cents. By 1990, inflation had eroded the value of the Australian money, with cumulative inflation being between 350% to 400% meaning the dollar had the purchasing power of 20 to 25 cents compared to 1966.
With the valuation of the coins, the Royal Australian Mint’s production of the coins actually cost more than the face value. The decision was made in 1990 to end production of the cent, and 1991 saw no one and two cent coins produced for circulation. Australia went into the future by officially withdrawing the coins from circulation in February of 1992. A system of rounding was put into place with totals ending in one, two, six, or seven being rounded down; three, four, eight, and nine being rounded up for cash payments. The coins remained legal tender but not widely accepted in commerce. The coins that were removed from circulation were melted, with the bronze medals made for the 2000 Olympics being produced with some of the recycled coins.
Public reaction to the ending of the two coins was mostly favorable since their individual purchasing power was virtually nil. Polling of the public at the time showed between 70% and 80% approval to be indifferent. The main concern was inflation or price gouging from the rounding. However, studies found no difference materialized. The cultural sentiment was the largest negative with two iconic designs being lost, but the mint has produced one-cent and two-cent coins since their circulation production ended. These collector coins have appeared in proof, mint, and other special sets being struck in traditional bronze, silver, and gold. So while the cent ended for circulation, it continues as a non-circulating legal-tender coin.
New Zealand also phased out its one- and two-cent coins in 1988. Unlike Australia, these coins were demonetized April 30, 1990, and no longer had legal-tender status. They as well went to a system of rounding to the nearest five (also known as the Swedish system). In 2004, New Zealand further ended production of its five-cent coin. The five-cent coins are currently still being redeemed when deposited or exchanged but are no longer accepted in transactions.
Again, as we talk about the end of the United States one-cent coin in 2026, we see through other examples of similar monetary initiatives around the world, the concept of removing small-denomination coinage isn’t new. It has happened before – even in the United States, with the elimination of the half cent, two-cent, and three-cent coins. As this five-part article series continues, we will continue seeing how history repeats and rhymes.