The federal government should seriously consider taking the penny out of circulation, a Quebec finance company says. 

And if that's successful, the nickel should be next, the Desjardins Group said in a report issued Thursday.

Not worth a red cent?
(CBC)

"If the senior management of the Bank of Canada decided [like the central banks of New Zealand and Australia] to publish the work of the researchers in this field and publicly stated that removing the penny from circulation would have no effect on the Consumer Price Index in the medium and long terms, many consumers would be reassured," Desjardins said. 

Using the one-cent coins costs Canadians $130 million a year to produce, store and transport, said group chief economist François Dupuis. Yet a company survey suggests that many Canadians don't like the coin, which has lost value since it was introduced a hundred years ago, and don't use it.

Instead, the coppers accumulate in jars, are pitched into fountains, left on store counters by the cash register or thrown away.

"Overall, it seems that the lower a coin's value, the less often it is used for purchases," the company said, based on the survey.

Pennies for thought:
Number of pennies in circulation: 20 billion Number for each Canadian: nearly 600 Number issued annually: 816 million
Source: Desjardins Group

Citing government statistics on the annual production of pennies, and the number in circulation — nearly 600 for each Canadian — Desjardins concludes that most people "tend to hoard pennies or even throw them away, rather than depositing them and putting them back into circulation, thereby demonstrating further proof of the coin's uselessness."

Moreover, countries such as Australia and New Zealand have already removed their one-cent coins from circulation without ill effects. (New Zealand has gone further, dropping its two- and five-cent coins as well.)

Dupuis thinks that prices wouldn't much change if the penny were dropped because they would be rounded to the nearest five cents. "For example, transactions where the final price would be $9.98, $9.99, $10.01 or $10.02 would go for $10.00. Those of $10.03, $10.04 or even $10.06, would go for $10.05."

There would be costs, borne by the mining companies that make the metal used in coins, the Royal Canadian Mint, which manufactures pennies, the armoured-car companies that transport them and companies that manufacture rolls and other products used to handle pennies.

According to the company's survey:

• The lower a coin's value, the less it's used; 66 per cent of respondents used loonies and toonies to make purchases, but only 37 per cent used pennies.
• Women use change more often than men do. 
• Older people use coins much more often than younger people. Fewer than one in six aged 18 to 25 use pennies to make purchases, compared with slightly more than half of older respondents.
• Just over half the respondents collect pennies to deposit, spend or to give to children, churches or charities.

The 2006 poll surveyed 658 Canadians with a margin of error estimated at plus or minus four per cent, 19 times out of 20.