Madam Speaker, I rise today to address Bill C-82, a bill which will enable the Government of Canada to replace the $2 note with a $2 coin.
The bill was recently studied by the Standing Committee on Government Operations. I am pleased to say all witnesses appearing before the committee supported the introduction of a $2 coin as a cost saving measure. This confirms the results of earlier surveys conducted by the Royal Canadian Mint whereby Canadians strongly approved of the new coin given the substantial savings that accrue to the government.
Clearly Canadians appreciate any step their government takes to reduce the deficit and save money.
Representatives from the vending machine industry confirmed their support for the proposed coin, even though they expressed some concern regarding the date of introduction of this coin. They fear that they will not have time to adjust the mechanisms of all their machines by the introduction date.
I can assure hon. members that we are sensitive to these concerns. In response to these concerns the Royal Canadian Mint, the Department of Finance and the Bank of Canada will co-operate with the individuals and groups involved, and especially with the vending machine industry, to ensure a smooth introduction of the new coin on the market, in order to minimize sale and business disruptions.
There will be a public awareness campaign to promote acceptance and use of the $2 coin by the Canadian public.
The government intends to introduce the new $2 coin in early 1996, as announced by the Minister of Finance in his budget speech in February 1995. We cannot afford to delay this budget item because we all stand to gain from the introduction of this new coin.
By replacing the $2 note with the coin, Canadians will save approximately $254 million over 20 years from the reduced production and distribution costs of the $2 coin as compared to the note.
The average life span of a note is one year while the average life span of a coin is twenty years. The cost to produce the note is 6 cents per unit compared to the estimated cost to produce the coin at 16 cents per unit. This combined with the savings the government will generate by changing the metal composition of the lower denominations will result in total savings of $500 million over 20 years.
Some have suggested that half a billion in savings is small change. We disagree. In our fight to eliminate the deficit we believe every dollar saved is a dollar earned. No saving is too small or insignificant.
As the Minister of Public Works and Government Services explained to the committee members, we need five pennies to make a nickel, five nickels to make a quarter, and four quarters to make a dollar; every penny counts.
The government takes deficit reduction very seriously. Any member of the House elected on a platform to reduce or eliminate the deficit must support this initiative. As we all know, the deficit cannot be eliminated through program cuts alone. Innovative ways must be found to cut government expenditures. The introduction of the $2 coin to replace the $2 note is an innovative cost saving measure.
Some people wonder why we did not simply do away with the $2 bill. They say we would have saved even more money, but we disagree.
Canadians use $2 notes in a large number of transactions every day. Because they are so heavily used, these notes tend to be in poor condition. The coin is a practical and far more durable alternative to the note. It allows the government to save more money than it would by simply eliminating the note.
If we eliminated the $2 denomination, we would not reduce the number of coins in the purses of Canadians, on the contrary. Studies have shown that the combination of $1, $2, $5 and $10 values is the most effective in reducing the number of coins and notes required. Without the $2 note, more loonies would be needed and Canadians would carry even more change in their pockets. Two loonies weigh 14 grammes, compared to 7.3 grammes for the proposed $2 coin. If we eliminated the $2 denomination, we would have to mint more $1 coins and that would cost an extra $23 million over a period of 20 years.
Some others might wonder why the government is proposing to introduce a $2 coin at a time when more and more people are using credit and debit cards. A $2 coin might seem a step backward to a time before paper money instead of a step forward toward more plastic. Cash cards will not mean the end of cash in society.
For the foreseeable future cash will be a necessary requirement. Like credit cards and debit cards, cash cards will find their own market niche for people who prefer to manage their cash in this way. However, there will always be a need for cash. This was also confirmed during the hearings of the government operations committee.
The presentation by the Canadian Federation of Independent Grocers revealed that debit cards are not being used as often as anticipated. The extent to which cash cards may replace coinage is at this time only a matter of conjecture. However, even if cash cards replace a significant percentage of transactions most of these will be of higher value and not coinage.
Coins will continue to play a role in commercial transactions. Already coins are used to acquire numerous services such a mass transit, telephone calls, washing machines at the laundromat, video and pool games, parking meters, even showers at campgrounds. The vending machine industry is presenting us with a greater variety of products and choices. These changes reflect the nature of the vending machine industry and of our economy in general.
The only constant is change and in the modern world, the process of change is rapid, wide reaching and never ending. Businesses must constantly adapt to new technologies and new practices.
As an aside, I want to point out to my colleagues in the House that representatives of the vending industry, including the president of Coca-Cola, clearly stated the costs of converting vending equipment would not be passed on to consumers.
Some people have suggested that we should compensate the vending machine industry for the expense of altering their machines. In an era of fiscal restraint, we simply cannot afford it. We must use our limited resources very strategically in ways that result in the greatest possible benefit for the greatest possible number of Canadians.
As I said earlier, the Royal Canadian Mint, the Department of Finance and the Bank of Canada will co-operate with the industry to ensure a smooth transition. Studies conducted by the Royal Canadian Mint have shown that 79 per cent of Canadians approved of this initiative when told that it would save the government millions of dollars.
Moreover, the disappearance of the $2 note does not seem to worry Canadians too much. Forty-five per cent said they were not very concerned, while only 19 per cent felt some nostalgia but no real concern. In concluding, we believe that to be practical a currency system must adapt to change. We must stay in the lead and be an example to others.
This bill reflects the will of the Canadian government to accept change in areas where others avoided it. Change is never easy. We believe that it is by making choices that we show leadership. Sometimes, making choices means letting go of some traditions to turn with confidence towards innovation and renewal.
