WE thought we knew Peter Costello well, and in a sense we did: the tall blond guy with the swagger of self-confidence, the master of the wounding jibe, the frowning, serious treasurer in a dark blue suit, the fluent wit and speaker. All these were the real Costello, a man born to the theatre of politics, and one of its most skilled performers in my lifetime. As treasurer, he presided over 12 years of the one of the best runs of growth Australia has ever experienced, and convinced himself and many others that it was no accident that it happened while he was at the tiller.

His ability was never in doubt. I saw him perform a number of times in international forums, and he left you feeling proud to be Australian: I wish I could say the same of every Australian minister. Some of his global peers have told me privately of their respect for him and his clear, constructive and sensible interventions around the conference table. Their acceptance of Melbourne’s bid to host the G20 finance ministers’ meeting in 2006 was partly the result of that respect.

And yet there was another Peter Costello we knew who was less impressive. He surrounded himself with admirers, and seemed to expect admiration as his due. He was the leadership contender who ignored the backbench electorate he needed to cultivate, the media star who regarded the media as unfriendly if it criticised him. He could be charming, and the life of the party. He was also incurably vain, and a bully.

ANZ bank chief economist Saul Eslake, a man widely respected for his integrity, has told how, in Hobart in 2002, he criticised the government’s decision to define the GST as a state tax (which it had done to make its tax take look smaller). By the time his plane landed back in Melbourne, Costello had already rung the bank’s chief executive with a threat that if this were repeated, there could be regulatory action taken that the ANZ would not like.

“After 2002, Costello never had any conversation with me about anything I had said, but there were numerous times when he or his staff rang to complain to people whom they thought might influence what I said,” recalls Eslake, who had known Costello since their days in the Young Liberals. “This might be acceptable behaviour in Singapore. It ought not to be acceptable in Australia.”

Eslake’s experience was far from unique. One foreign bank succumbed to the pressure and moved its chief economist aside after the treasurer complained about his writings. Another senior bank economist declined to be quoted on his experience after he disagreed publicly with one of the treasurer’s policies.

My experience as economics editor of The Age was similar. In 12 years, Costello never complained to me face to face about anything I had written. Rather, he went behind my back, complaining to my editors and suggesting I be replaced with someone more amenable — suggestions they ignored.

In some ways Costello resembled the younger Sir Robert Menzies. In his first stint as prime minister from 1939 to 1941, Menzies was seen as brilliant yet arrogant, a glorious speaker, yet disdainful of lesser beings. Eight years in the wilderness followed, from which he re-emerged with a greater understanding of people, and a new ability to weld them into a successful team. Costello never had those years in the wilderness. Everything came to him easily. That was perhaps his greatest handicap.

In two ways, it is hard to pin down his achievements as treasurer. It is hard to define how much governments influence economic activity. They claim credit for anything good that happens on their watch and disown responsibility for anything bad. Their opponents always argue the reverse. The reality is elusive.

In this government, moreover, Howard was the boss. While they worked closely together, and mostly saw eye to eye, Howard clearly called the shots, even in Costello’s area of responsibility. It was Howard who overrode Costello’s objections to a goods and services tax — although Costello had to go out and sell it to a sceptical Australia, and did so with great skill.

Howard barred Costello from joining the Aboriginal reconciliation march, rejected his plans for an emissions trading scheme and vetoed his proposal to introduce jail terms for anti-competitive conduct. The deluge of middle-class welfare payments in the government’s later years came mostly from Howard — with the baby bonus an obvious exception.

But the work that went into the 1996 budget cuts was clearly Costello’s. He can claim credit for putting the budget back in the black and keeping it there. It was because Labor inherited his budget surpluses and zero net debt that it has been able to inject so much stimulus into the economy in recent months.

The Coalition may have been lucky that it governed at a time of global prosperity, rising commodity prices and low interest rates worldwide. It may have been lucky to inherit the benefits of Labor’s reforms. But Costello kept Australia on track, and did nothing to derail our good luck.

One final thing. In a government notorious for playing favourites, Costello made key appointments solely on merit. Ken Henry, former tax adviser to Paul Keating, became secretary of Treasury. Ian Macfarlane and Glenn Stevens at the Reserve Bank, John Laker at the Australian Prudential Regulation Authority, Graeme Samuel at the Australian Competition and Consumer Commission were quality appointments that served Australia well.

Could he have come back from the wilderness a wiser, humbler man? We will now probably never know.

Tim Colebatch is economics editor.