That's division 16, Ms. Pearse?
Evidence of meeting #59 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was change.
A recording is available from Parliament.
Evidence of meeting #59 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was change.
A recording is available from Parliament.
9:15 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Division 16 deals with amendments to the Currency Act. The proposed amendments are necessary to implement the government's decision to eliminate the penny.
They are fairly technical amendments, and they will clarify that the government can redeem coins without “calling them in”. Calling in a coin would have the effect of removing it as legal tender, which is inconsistent with the government's announcement that the penny would retain its value indefinitely and can continue to be used in payments.
The amendments also clarify that the payments for the redemption of the coins, including the associated cost, can be made out of the consolidated revenue fund on the authority of the Minister of Finance.
9:15 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you very much for that.
Do members have any questions?
Ms. Nash.
9:15 p.m.
NDP
Peggy Nash NDP Parkdale—High Park, ON
Yes. When would this change take effect? I know the announcement has already been made and the Mint has stopped producing the penny, but if this legislation is passed, how quickly would this take effect? I'm getting calls from small businesses and they are concerned about what this means for transactions, especially in small stores. Do they have to change their cash registers?
Could you talk a bit about the implementation?
9:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
I'll just flag that I am not the expert on the penny, but I will do my best.
The Royal Canadian Mint will cease distributing pennies to financial institutions effective this fall, 2012. Businesses and individuals will then be able to redeem pennies through their financial institutions for melting and recycling of the metal content.
Pennies will retain their value and can be used indefinitely. So the consumers will be able to continue using their pennies for as long as they care to do so.
9:20 p.m.
NDP
Peggy Nash NDP Parkdale—High Park, ON
So given the fact that it's not current but they'll still have value, people could still pay in pennies, even after this change takes effect. Is that correct?
9:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
As I understand it, the penny will continue to be legal tender and businesses are encouraged to continue to accept the coin as payment.
I would just say there is a backgrounder that is available on the Department of Finance and the Mint websites that provides information to both consumers and businesses about the expectations going into this period.
9:20 p.m.
Conservative
9:20 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I have a couple of questions. Actually we had to stop Pat Martin from coming, as he wanted to talk about the penny so much.
The briefing notes indicate that businesses will adjust their prices. For a difference of one or two cents, the price will be rounded down and for a difference of three or four cents, the price will be rounded up to five cents more. If I am not mistaken, that is how it will be.
There will be no oversight. I imagine we will rely on the good faith and goodwill of the businesses.
9:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
The backgrounder is meant to provide guidance or an expectation around the government's intent. It doesn't establish regulations or obligations on either the consumer or the business, as I understand it.
9:20 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
For example, if an item costs $1.11, there is nothing to force a business to reduce the price to $1.10 instead of increasing it to $1.15. This is just a recommendation.
9:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Exactly.
9:20 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Out of curiosity: what is the Royal Canadian Mint going to do with all the pennies it will receive? Is it going to melt them and resell the copper, or will they be used in some other way?
9:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
My speaking notes here say for melting and recycling of the metal content.
9:20 p.m.
Conservative
The Chair Conservative James Rajotte
There is a minute left in the NDP round. No? Okay.
I have Mr. Wilks, please, for five minutes.
9:20 p.m.
Conservative
David Wilks Conservative Kootenay—Columbia, BC
Thank you very much, Chair.
It's more of a commentary than anything else, but as a small-business owner since 1999, I have rounded up and down and have not used the penny. I find it completely redundant. The rule of thumb is one and two down, three and four up.
My question to the witnesses is I wonder if there has been any thought or calculation, to relieve the fears of anyone that a small business could round up more than down, to making a calculation or experimenting on any type of business whereby they could check it for a year to see how much it went down with regard to $3.11 versus $3.13 and what the difference would be over a year period, depending on whether you went up or down.
9:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Do you want to know if we have considered monitoring the situation?
9:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
The experience of other countries suggests that eliminating low-denomination coins will not affect fair rounding practices. I can come back to the committee about whether my colleagues have actually looked at that issue. What we have made explicit in the backgrounder is the government's intentions regarding rounding and treating consumers in a fair and consistent manner.
9:25 p.m.
Conservative
David Wilks Conservative Kootenay—Columbia, BC
Further to that, it's fairly well known that the penny costs 1.6 cents to make, as opposed to the one cent that it's worth. What are the savings to the government?
9:25 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
I believe the budget announced $11 million per annum. I don't have it in front of me. I apologize.
9:25 p.m.
Conservative
David Wilks Conservative Kootenay—Columbia, BC
Will pennies be legal tender until such time as there are no more?
9:25 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Legislatively, they will continue to be legal tender forever.
9:25 p.m.
Conservative
David Wilks Conservative Kootenay—Columbia, BC
Thank you very much.
Mr. Chair, I would like to give my time to anyone else who may wish to ask questions.