Unemployment is at a 14-year low. The household savings ratio is at a 40-year high. Households are four years ahead on their mortgage repayments. Those who own a house saw their wealth rise by up to 30 per cent last year. Household debts are cheap to service. We're even getting a break from high petrol prices thanks to a cut in the excise tax, funded by a government budget buoyed by rising commodity prices.

Things are looking good for households, and this is a huge problem for whoever wins the election. It's a problem because nothing about the current boom is sustainable. All these things are being fuelled by unsustainable one-offs, at a time when some of the economic, geopolitical, environmental, and social risks facing the global and Australian economies look downright scary.

Only two things are certain: these good times will come to an end and whoever wins government - particularly if there is a change in government - will cop the blame when they do. This can be managed, but both parties best start preparing now.

Start with the economy here at home. The economy is booming because households are spending the money they saved during lockdowns. Household wealth is booming because the low interest rates put in place during COVID are fuelling a property boom. The government's budget is booming because the war in Ukraine and other global factors are fuelling commodity prices and thus tax revenues. Petrol prices have eased because of a temporary cut in the excise tax.

None of these are permanent. Interest rates will rise in the coming months. Households will eventually run down their lockdown savings. House prices will fall 15 per cent over the next two years, according to the RBA, and the cost of mortgages, credit cards and personal loans will increase. Fuel prices will rise when the excise tax cut expires. Government revenues will return to normal when commodity prices ease.

The "new normal" doesn't look good. The pre-COVID economy was characterised by low wages, low investment, and low productivity. Throw in higher interest rates, higher prices, $1 trillion of debt and less fiscal and monetary policy space to support the economy and you start to get a picture of what awaits the winner of the next election.

Don't expect the world economy to come to our rescue. Nobody knows when the war in Ukraine will end or - more importantly - how it will end. Rising US interest rates and soaring food and commodity prices spell disaster for the world's developing countries, including many in Australia's backyard.

Sri Lanka is now in a currency crisis and has defaulted on its debts. Food and energy prices are fuelling unrest in Tunisia and Pakistan. Almost 60 per cent of the world's poorest countries are either in debt distress or at high risk of it, according to the World Bank, with more than one-third of their debt carrying floating interest rates. Things will get worse as the US dollar and interest rates continue to rise.

Australia's biggest trading partner - China - is watching its economy slow as it continues its foolish policy of "COVID-zero". China's trade restrictions against Australia remain in place as the relationship between the two countries holds firm at rock-bottom. Tensions between China and the West remain high. The world's developing countries now owe more money to China than they do to the "Paris club" of rich countries combined. Developing country defaults will now have geopolitical consequences.

Australia's biggest strategic power - the United States - remains plagued with social instability. The interest-rate cycle and an inverted yield curve predict that a US recession is around the corner. Biden's approval ratings are dangerously low. The Democrats will lose big in the upcoming midterms if current polls are right. If they lose Congress, American policymakers will be back in gridlock, paralysed by indecision, while the far right makes inroads in France.

It's a perfect storm: Australia will be importing risk and instability from the world exactly when our own economy is coming off its post-lockdown sugar hit. Whoever wins the next election will need a plan on how to manage this difficult environment if they are to avoid being blamed for it. Three lessons stand out.

First, the incoming government needs to learn how to fix problems without spending lots of money. We have a lot of expensive problems at the moment. Housing and childcare are unaffordable. Aged care is broken. The safety net is insufficient. The climate crisis continues unabated.

Throwing money at these problems is easy. But with inflation high, government debt even higher, and interest rates on the rise, big increases in government spending will be counterproductive. We need to be smarter in how we tackle these problems. We need to redesign our aged-care and child-care sectors to lower prices and attract more workers, not just throw money at them. We need to change regulations to boost housing supply, not just fuel demand with more cash handouts. We need a price on carbon and regulatory reforms to promote green finance, not a Green New Deal.

Second, an incoming government needs to do more with what they've got. Tax reform will boost efficiencies in the system. This will boost tax revenues through increased business and household income, instead of new taxes or higher tax rates. An audit on government assets and spending will help free up additional resources: selling government-owned land in prime areas and relocating to cheaper locations is one way to free up billions of dollars for other priorities. An investment approach to government spending will ensure that government spending creates assets, not just debt.

Third, the incoming government needs a plan on where economic growth and jobs will come from. Here's a hint: high inflation means it won't come from government spending and high interest rates mean it won't come from monetary policy. There's only one remaining lever for government to pull, and that's structural reform. This means reforming labour, product and capital markets and reforming the tax and welfare systems to make it easier to employ people, easier to invest and easier to start businesses. Neither party has committed to this sort of reform. Reform is hard. But it's even harder without an election mandate.

Finally, the incoming government needs to get smart on how we engage with the world. Aggravating our biggest trading partner for no reason has not been a great strategy. And now is definitely not the time to be pulling up the drawbridge on trade or foreign investment in pursuit of fairy tales of "self-reliance". We should be removing trade restrictions, not adding new ones. We should be focusing on the fastest-growing region in the world - Asia - not the stagnating relics of Europe and the UK. We should be embracing technology, not trying to regulate it into oblivion.

Whoever wins the election will be inheriting a booming economy that will get weaker on their watch. If they want to avoid being blamed for it, they best start planning for it now.