Prime minister Jean Chretien and Paul Martin just before delivering a budget on Feb. 28, 2000. (Dave Chan for The Globe and Mail)

The first two budgets under Liberal prime minister Jean Chrétien marked the first time a contingency reserve was clearly identified and explained. The reserve was set at $3-billion a year and would go toward reducing the size of the deficit if it was not required.

As the government moved from deficit to surplus in the 1997-98 fiscal year, the practice was maintained with unused contingencies going toward reducing the debt. Over time, Liberal budgets began to add additional contingencies, described as prudence. Generally this would be worth $1-billion for the year ahead and grow by $1-billion for each additional year into the forecast.

This prudence was briefly eliminated and the contingency was scaled back in the December 2001 budget in response to economic conditions and the Sept. 11, 2001 terrorist attack. That budget eliminated the prudence fund and reduced the contingency to $2-billion. The move allowed the government to avoid showing a deficit. A similar adjustment was made in a 2003 fiscal update.

The reserve and the prudence fund were later restored in the 2003 budget. The reserve and prudence funds were maintained under prime minister Paul Martin, the former finance minister who was prime minister from Dec. 2003 until his defeat in the 2006 federal election.

"The government continues to hide large surpluses and then blow them in end of year bonanzas, and the budget continues exactly this kind of practice," said Mr. Harper, then Official Opposition leader, in his response to the 2004 Liberal budget. "There is a better way. That better way is to return some of these massive surpluses to Canadians and their families in the form of tax reductions."