The idiomatic phrase "the penny dropped," literally means "I finally understand."
In this case, the Conservative government along with a slew of businesses that were lobbying them, finally understood that our money has devalued to such a great degree, that the penny was not only worthless as a currency, it cost more to make than it was worth.
Copper prices, like all commodities have experienced a boom, and copper is such a useful and important metal, governments have long ceased using it as coinage. The Canadian Mint last made pure copper pennies in 1996, a long time hold out.
In the US that happened in 1943, but they made bronze pennies up until 1982.
Canadian pennies are now made of copper plated steel with a bit of nickel, and US pennies are copper plated zinc.
The graph seen here, illustrates what has happened to the value of the Canadian fiat dollar over a very short time, and therefore the penny, all of it in just part of my lifetime (graphs for US dollars are very similar).
A fiat dollar, like any fiat currency, is only worth something because a government regulation says it is.
Paper currency once upon at time, represented or was "backed by" some amount of a real metal, like gold or silver. The metals were too heavy to carry around, hence paper.
I can recall that the penny once had value. It took 3 pennies to buy a daily newspaper when I was a child in Toronto. Penny candy, was just that, candy that cost a penny or two.
Today, most people would not even stoop to pick up a lost penny on the ground. Most view pennies as an annoyance. What happened? Well, it's a long and complicated story, here is where you can start if you really want to find out.
Not only is this an end for an historic coin in Canada, but a large hole is left in Canadian English, though it may take years to phase out. My young grandson will grow-up and he will be mystified by phrases like:
Penny Pincher, penny wise and pound foolish, pretty penny, penny for your thoughts, a penny saved is a penny earned, without two pennies to rub together, penny ante poker, and on and on. Here is an interesting article. It's a sad day.