Briefly, within the days after the dying of the queen, we have been afforded a glimpse into the machine that makes Australia's cash.
Assistant Treasury Minister Andrew Leigh turned up on the Royal Australian Mint to elucidate the method by which a portrait of the King Charles will exchange the portrait of the queen on the heads-side of cash minted from 2023.
"For the avoidance of doubt, for any conspiracy theorists on the market, all cash bearing the face of Queen Elizabeth II will stay authorized tender," he stated.
The Mint makes a rare 120 million to 140 million cash per 12 months (much more, as a lot as 175 million when Australians stocked up on money throughout the first 12 months of COVID), and it's a money-making operation in additional methods than one.
It prices 20 cents to make a $2 coin
Normally it prices the Mint far much less to make every coin than each turns into definitely worth the second it's bought to a financial institution.
Earlier than steel costs climbed, it price the mint about 20 cents to make a $2 coin, and about 15 cents to make a 50 cent coin.
The revenue – the massive mark-up – goes straight to the Commonwealth price range as non-taxation income, tens of hundreds of thousands of dollars per 12 months.
It is referred to as "seigniorage", an historical French phrase that refers back to the revenue solely a seignior (feudal lord) could make from the unique proper to mint cash.
This monetary 12 months the federal government expects $59 million, subsequent 12 months $67 million.
That the federal government can hold making a living from seigniorage seems to defy widespread sense.
Absolutely we have nearly all of the cash we'd like. Merely changing cash as they get worn out does not earn seigniorage.
However a earlier head of the Mint, Ross MacDiarmid, let the cat out of the bag in 2014 when he advised a Senate committee this.
"Most of the cash that we offer are towards cash that disappear down the again of chairs, down the again of automotive seats, into garbage dumps and, in come circumstances, are taken abroad."
When requested whether or not he was critically suggesting 100 million or so cash per 12 months disappear, MacDiarmid replied he was.
This implies the federal government makes tens of hundreds of thousands per 12 months changing – at an enormous mark-up – issues we have now misplaced.
And it is just the start.
The $5, $10, $20, $50 and $100 notes made by Be aware Printing Australia for the Reserve Financial institution have an astronomical mark-up.
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It prices 32 cents to make a $100 notice
In 2020-21, Be aware Printing Australia delivered 234 million notes to the financial institution for a charge of $74 million, suggesting they price about 32 cents every to make.
Most have been $50 and $100 notes, bought to non-public banks for $50 and $100 every.
That revenue is accounted for in a different way to the revenue for cash, and is difficult to search out.
One estimate, in a global research of 90 nations on the finish of the Nineties, discovered Australia's earnings from seigniorage of notes and cash to be low in comparison with different nations at 2.6 per cent of presidency spending.
And a couple of.6 per cent is a gigantic quantity.
As of late that'd be $16.3 billion, which is about what we spend on the Pharmaceutical Advantages Scheme.
Potential billions of dollars of revenue
The Reserve Financial institution measures seigniorage in a different way, utilizing a method that may produce odd outcomes as a result of it is determined by the speed of curiosity.
Earlier than COVID, its view was that it solely made about $1 billion per 12 months from seigniorage, a determine it does not often calculate and does not report back to the federal government.
An easier calculation would take the $6.8 billion of additional notes the financial institution equipped in 2020-21, deduct the $74 million it price to print the notes and about as a lot once more for the funds it makes to business banks to encourage them to carry enough shares and return worn notes and provide you with $6.6 billion.
A 12 months earlier, as we stocked up on money as COVID took maintain, the financial institution would have made $10 billion.
An finish to straightforward cash?
The earnings from printing notes do not movement on to the price range, besides partially through Reserve Financial institution dividends, however they assist by retaining the financial institution self-funding.
Earnings from notes and cash are below menace. For the Reserve Financial institution it is the specter of us sooner or later wanting much less money – though for the second, whereas we're utilizing much less money in transactions, we're holding on to extra for safekeeping than ever.
For the Mint, it is the truth that we're utilizing much less money. In 2020-21 it produced $82.2 billion value of recent cash, down from $114 billion a decade earlier.
Its different menace is the hovering value of steel. Mint chief government Leigh Gordon revealed final week it was costing north of 12 cents to make every five-cent piece.
Earlier this 12 months, after nickel costs soared within the wake of Russia's invasion of Ukraine, he stated even 20 cent cash have been about to lose cash.
Cheaper cash to the rescue?
Nickel costs have since come down, and one of many oddities of pricing is that it prices far much less to make the largely copper and aluminium $1 and $2 cash (about eight cents every) than it does the nickel-heavy 10 and 20 cent cash (14-28 cents), however the Mint is getting ready.
In 2016, the Mint developed a proposal to cheapen the steel content material of its 5, ten and 20 cent cash and shrink the dimensions of its 50 cent cash, which it says was favourably obtained by retailers and banks who wished cash that weighed much less.
The concept was submitted to the Treasury, however "not progressed".
Within the meantime it has partnered with Woolworths to provide restricted version "Olympic" and "Wiggles" cash which are delivered as change by way of money registers moderately than by way of banks, for which it fees a contact over $2.
There's so much that may be accomplished, and each time there is a disaster, we appear to rediscover money. However finally the money-making machine will cease.