The Australian one-cent coin is the smallest denomination of the Australian dollar. It was introduced with the Currency Act 1965 (Commonwealth) but - unlike some of the other denominations - it did not replace an earlier pre-decimal coin; given that the 5 cents piece replaced the sixpence, one cent was technically equal to 1.2 pence but the Act rounded that to one penny. The one cent coin was much smaller than the penny though, so the penny denomination did not continue to circulate (unlike the sixpence, shilling and florin which were equivalent to respectively 5 cents, 10 cents and 20 cents and were re-denominated as such).
The one cent and the two cent denominations were withdrawn from circulation in February 1992. They have never been demonetised though and remain legal tender.
The denomination is occasionally used by both the Royal Australian Mint and the Perth Mint to issue collector coins, which are legal tender in Australia - such as this one. In 2006, the Royal Australian Mint produced some for mint sets (brilliant uncirculated coins and proofs), celebrating the 40th anniversary of the decimal currency. The silver proofs (only) have Her Majesty's "Second Portrait" (by Arnold Machin), which was last used in Australia in 1984.
The 8-coin Fine Silver Proof 2006 Year Set contains 1 cent, 2 cents, 5 cents, 10 cents, 20 cents, 50 cents (round), $1 and $2 coins - all with the Queen's Second Portrait by Arnold Machin, as the initial decimal coins released in 1966.
The coins were made of 99.9% silver. No coins of this type were released into circulation.