Australia's Currency Act of 1965 – an Act relating to Currency, Coinage and Legal Tender – was the Australian version of an eventual international movement to establish contemporary values for traditional coins and currency that was considered to have grown outdated based on the value of precious metals. The legislation established values for currency within the Australian legal tender system, establishing standard composition of coins. Also included were weight, design and dimension. The actual value of authorized coins was in need of adjustment.
This Australian Act coincided with the Coinage Act of 1965 in which the United States changed the composition of coins from solid pieces of silver to primarily being struck from copper and lined with a percentage of silver on the face of the coins. The penny stayed pure copper and the nickel stayed pure nickel. The Australian Currency Act of 1965 also implemented these lower-valued alloys in coin development.
Australia had a problem that the United States did not necessarily have; Australia is a member of the British Commonwealth and the British money system was clearly different. Australia had introduced the dollar system only three years earlier, which had been done with some hesitation. The possibility of the changeover was mentioned in 1958. The decimal currency system provided by the dollar in units less than 100 made the value consistent and compatible.
The legislature had some difficulty determining the design of the coins. The final decision was to use the emblems of animals that are unique and indigenous to Australia with, of course, Queen Elizabeth's image struck on the 50 cent piece. With the new legal tender legislation that was planned to stay in place, it was the perfect time to re-design the national money combination.
The next issue for Australia was determining what denomination group to use. After receiving approval from Queen Elizabeth, it was decided that they would use a combination of 1-2-5-10 cent pieces with the addition of 20 cent and 50 cent pieces. The 50 cent coin was composed of 80% silver. The smaller coins were made of copper and a copper-nickel composite.
Australia would add a one dollar and two dollar coin in the 1980s. The significance of the Australian Currency Act of 1965 is that it may have been the turning point in Britain's eventual decision to convert to the decimal system, even though that did not occur until 1971. The conversion rates of the pound, shilling and pence were problematic; consistent decimal values were assigned to the British monetary units in terms of the dollar, creating a general compromise of updating the system and maintaining British tradition in the process.