The Canadian Press - ONLINE EDITION

Finance Minister Jim Flaherty given power to pay for returned pennies

  • Print

OTTAWA - The minister in charge of billions of dollars in government spending now has been given the power to redeem the lowly penny.

A cabinet order this month gave Finance Minister Jim Flaherty the authority to pay financial institutions for the mountains of pennies they'll begin to return to the Royal Canadian Mint early next year.

In his March budget, Flaherty unexpectedly announced the demise of the one-cent piece, saying pennies cost too much to manufacture and are a nuisance to many Canadians.

The last new penny was struck May 4 at a Winnipeg plant. And starting on Feb. 4 next year, the mint will stop distributing any remaining stock and instead start collecting pennies from banks and other financial institutions.

Under the Currency Act, however, there was no mechanism to reimburse the banks for the rolls of copper and copper-plated pieces until cabinet passed an order-in-council Dec. 6 in order to "support an orderly pace of withdrawal of pennies from the economy."

The order will also compensate the Royal Canadian Mint for its handling costs.

The mint has stamped an estimated 35 billion pennies from metal plates over the last century.

"Based on the experience of other countries, the amount of pennies returned by the public should be a fraction of this amount, and be spread mainly over the next few years," said David Barnabe, a Finance Canada official.

The penny will remain perfectly legal tender even after Feb. 4, though the number in circulation will begin to decline sharply. Financial institutions have been given no deadlines for surrendering their one-cent coins.

A spokeswoman for the mint, Christine Aquino, says officials are still "finalizing the logistics" for the final disposition of the returned coins, though they are expected to be melted down and the metal recycled.

Under the Currency Act, only persons licensed by the finance minister are permitted to melt down coins, others face a penalty of a $250 fine and-or a maximum year in jail.

The federal government initially intended to stop distribution of pennies this fall, but postponed the process until February after pushback from retailers and small businesses, who wanted the jingling coins for holiday shoppers.

Flaherty also said he wanted to give charities more time to launch so-called "penny drive" campaigns, in which Canadians will be asked to donate their one-cent pieces to good causes.

As the coins are withdrawn, cash transactions will begin to be rounded off to the nearest five cents, but there are no government-imposed rules or policing. Electronic transactions, such as those on debit cards or credit cards, would still be registered in cents.

A spokeswoman for RBC Royal Bank says the bank, like other financial institutions, will stop paying out or issuing pennies on Feb. 4 and is working with the mint on the efficient "repatriation" of the coins.

"Unfortunately, due to the anticipated high volume of pennies delivered to RBC branches by the public and charities, there could be some incremental costs for delivery to the various RBC distribution centres for which RBC will not be compensated," Suzanne Willers said from Toronto.

The Royal Canadian Mint had been spending 1.6 cents to stamp out each one-cent coin, with the annual bill to government at about $11 million for production and other costs.

Many other countries have already withdrawn their lowest-denomination coins, including Switzerland, the Netherlands, Norway and Australia. The Bank of Canada in a 2005 study said that scrapping the penny would have little or no impact on inflation.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes


  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.


Make text: Larger | Smaller


Trouba talks about injury and potential for Jets

View more like this

Photo Store Gallery

  • Marc Gallant/Winnipeg Free Press. Gardening Column- Assiniboine Park English Garden. July 19, 2002.
  • JOE.BRYKSA@FREEPRESS.MB.CA Local-(Standup photo)- Humming Around- A female ruby -throated hummingbird fly's through the bee bomb  flowers Friday at the Assiniboine Park English Garden- Nectar from flowers are their main source of food. Hummingbirds wings can beat as fast as 75x times second. Better get a glimpse of them soon the birds fly far south for the winter - from Mexico to South America- JOE BRYKSA/WINNIPEG FREE PRESS- Sept 10, 2009

View More Gallery Photos


Do you think zipper-merging will help clear up Winnipeg's traffic woes?

View Results

View Related Story

Ads by Google