I'm having difficulty myself working out just precisely how this new fund would set the premiums in the kind of economic context moving forward. I guess the new board will have to set the premium on a forward-looking basis, what's going to balance the account in the coming year, and establish a reserve fund that will initially be $2 billion, or what the government is allocating.
I guess it really remains up to the board how big a reserve fund they think will need to be built up, and that's going to be set by the government. But certainly if we enter a recession next year, as Mr. McCallum said, the premiums would have to rise, and certainly if it was a recession that went on for more than a year or two.
According to the calculations I've seen, I guess the ones the chief actuary quotes based on historical experience, if we went into a fairly prolonged and severe recession, then you would need a reserve fund in the order of $10 billion to $15 billion. Those numbers are several years old, so I suspect it's from the higher end.
As for the $2 billion, I think since the new premium-setting mechanism came in, the intent was to balance funds, but in fact a $1 billion surplus has been run while we're notionally balancing. I think the intent here is that if you get a bit of an overshoot, it's not lost to the EI system more than it is to create a large reserve fund to ride us through a recession.