What does it take to be a successful treasurer? Many would name not just intelligence but also intangible qualities like dynamism, flair, optimism and an ability to sell policy. To such people, Paul Keating and Peter Costello are the models of success.

If you believe this view, Scott Morrison is now engaged in a test of capability. Can he wrestle the economy into health and the budget deficit into quiescence? Can he walk in the footsteps of those giants, Keating and Costello, the economic colossuses of the past four decades?

But if you just look at the Canberra theatrics, you’re missing the point. Treasurers shape economies only rarely. Mostly, they are shaped by them. They rarely deserve as much praise or as much blame as they receive.

The truth is that federal treasurer ships succeed or fail because of two things above all: the world economy, and the availability of a clear agenda for action. The combination made the reputations of both Keating in the early and mid 1980s and Costello in the late 1990s. It will probably shape Morrison’s reputation too – and he’s running out of time to make a mark.

Economies on the rise

As you can see from the graph below, Keating and Costello were both lucky enough to arrive at their jobs with the world economy on the rise. (We’re using world growth because it removes any influence local politicians might have on conditions. But the Australian growth picture is surprisingly similar.)

Treasurers and the world economy

For Keating, in particular, the 1983 election came pretty much at the exact low point of the global economic cycle. By the time world economic growth again dropped to 3%, in 1990, Keating’s reputation was already made. Though the contrast between Costello and his Labor predecessors was smaller, his time in the job was also mostly marked by global prosperity.

Action stations

Both Keating and Costello also benefited from a clear agenda. In Keating’s case, that agenda was the set of reforms that had already been implemented in many countries in the 1970s: floating exchange rates, financial deregulation, lower tariffs, freer trade and means testing of social spending. Costello drove the agenda to rein in spending in 1996, but the drive for a GST again mirrored overseas trends.

Curbing spending, in particular, is a trick best done when economic growth is strong and unemployment is falling. Keating’s famously tough May 1987 economic statement came after three years of 4% or better Australian GDP growth. Costello implemented his cuts after four years of 4% growth. Both were operating in strong world economies.

Unlucky in the 2010s

Pity, then, their unluckier successors, who have struggled to control the deficit in a sluggish post-GFC world. Take another look at that graph: world economic growth has stayed below 3% longer than at any other period in the past half-century. We don’t really know why. But slow world growth has ensured that Australian growth has rarely exceeded 2.5%, and even that figure has been boosted by particularly strong immigration. That in turn has meant big Australian budget deficits, year after year.

There’s also no obvious huge international reform agenda for an Australian treasurer to follow. The best candidate was a carbon tax, but Tony Abbott’s election promise required Joe Hockey to kill that, complicating blowing out the deficit for years to come. Today’s toughest economic challenges – education, transport, health – require mostly state-level action.

So Lady Luck has spurned every federal treasurer since Costello. Rightly or wrongly, history remembers none of them as huge successes.

Morrison’s last hope

Now Morrison is betting the world economy will finally send some luck his way. Based on signs of stronger global growth, the 2018–19 Budget predicts two years of 3% Australian growth ahead, finally. That’s where Morrison’s getting the extra tax money that is funding tax cuts. That’s where Labor’s Chris Bowen will hope to get much of his money from, too, if he becomes treasurer this year or next.

Both will hope that Australia’s luck will turn on their watch, and that the world will boom as it did for those lucky past treasurers Keating and Costello.