Bite Sized Basics: The Switch to Decimal Currency Australia’s Rational Move in 1966

Posted by Owun Taylor

Before 1966, Australia used a currency system that might seem puzzling to us today. They used pounds, shillings, and pence instead of the dollars and cents we’re familiar with now. This system had its roots in British traditions, but as times changed, it became clear that a switch to decimal currency was necessary for various practical reasons.

Off to the shops:

Imagine going to the store and trying to calculate the prices of things using pounds, shillings, and pence. It was like trying to solve a math puzzle whenever you wanted to buy something! This made shopping and handling money confusing for everyone and I mean everyone, from everyday people on the streets to businesses and banks. This complex currency system had 12 pence in a shilling and 20 shillings in a pound, leading to many tricky calculations.

The swinging 60’s:

The world was evolving, and trade and finance were becoming more international. Australia’s old system didn’t fit well with the simpler decimal systems many other countries used. This created difficulties when dealing with international trade, tourism, and financial transactions. Converting between the Australian currency and other countries’ currencies was quite literally like trying to translate between two different languages, while juggling knives, on a boat, in a lake on a windy day… it slowed things down, you needed to concentrate and could lead to mistakes.

The decision to switch to a decimal currency based on units of 10 was a smart move. It made calculations and transactions so much easier. The government introduced the Australian dollar and 100 smaller units called cents within it. This made everyday transactions smoother, as people could now understand prices and values without needing to straddle complex mental calculations.

A simpler life:

The switch to decimal currency also had economic benefits. It simplified bookkeeping for businesses and banks, reducing the chances of errors. This meant that all financial transactions could be handled more efficiently, having the long-term knock-on effect of making it easier for the economy to grow.
It also made it easier for people to compare prices and discounts and understand the value of things, which encouraged fair competition among businesses.

Transition time:

The government, led by the Liberal-Country Party Coalition of Prime Minister Robert Menzies, announced in 1963 that it would introduce decimal currency in 1966. As you can imagine, there was going to be some resistance, so education played a big role in smoothing the transition into this new system. People needed to understand the new currency to use it effectively.

A national education campaign was launched to help everyone, from schoolchildren to adults, grasp the new decimal currency. They used catchy slogans and visual materials to teach people how to use dollars and cents in their daily lives.

Embracing change:

On February 14, 1966, the new decimal currency was officially introduced in Australia. The switch wasn’t always smooth – some people were used to the old ways and were hesitant about change…. (no pun intended). But over time, the benefits of the new system became clear. It made life simpler, transactions smoother and put Australia in line with the modern world’s financial practices.

In the end, the move to decimal currency was a wise decision that made Australia’s economy more efficient, its businesses more competitive, and everyday life more straightforward. It showed that sometimes, embracing change can lead to better outcomes for everyone.

Owun

Owun is the Senior Education Specialist at Blue Wealth and hosts The Clever Investor podcast. He has worked in finance and property for well over 20 years and is known for his ability to make complex world of wealth creation easy to understand.

Posted by Owun Taylor, on 21st Jan 2025