For all the Coalition’s boasts about superior economic management, Anthony Albanese’s primary task will be to navigate his new government through the minefield bequeathed to him by his predecessors.

Mounting deficits, a mountain of debt, an overstimulated economy and ill-disciplined spending are all operating in a macro-economic environment that no longer reacts or behaves the way the textbooks say it should.

That will be no easy task.

After almost a decade in government without ever once producing a budget surplus — despite promises to the contrary — the Coalition managed to double the nation’s debt even before the pandemic hit.

Its legacy? At least another decade of deficits and a trillion-dollar national debt.

Ideology often trumped economics as the Coalition repeatedly shut off sources of revenue and added billions of dollars of unnecessary expenditure.

It canned the mining tax after politicising it as an evil. In the process, it denied generations of Australians their rightful inheritance and — instead of investing in health, education and aged care — transferred the proceeds to foreign investors.

Then there was the carbon tax. It dumped the Gillard government’s revenue-neutral carbon price and replaced it with a massive and inefficient subsidy, handing out billions of dollars to polluters in a scheme that now has been transformed into… a carbon price.

And while it could rightly claim credit for shielding much of the country from the ravages of the worst recession in a century, it did so via a $90 billion scheme, Jobkeeper, that hosed extraordinary amounts of cash onto a large number of recipients who simply didn’t need it.

That cash — along with an additional $240 billion COVID spending — has helped ignite an inflationary tinderbox.

And, as a parting gift, the stage-three tax cuts — now endorsed by the incoming Albanese government — will strip $37 billion a year from revenue by early next decade, line the pockets of middle and high-income earners and turbo-charge inflation. More on that later.

Wages in the doldrums

It is difficult enough to try to fix the mistakes of others. In some cases, such as the mining tax, it just isn’t worth the political mileage to revisit old battlegrounds.

But what do you do when all the old rules no longer apply?

Two cornerstones of economic theory appear to have come adrift in recent times that will make life ever tougher for the new government. Both revolve around inflation: one the relationship between wages and inflation and the other, economic growth and inflation.

For 30 years, consumer prices for everyday goods have been in check. Suddenly, they’re surging out of control and most of the current crop of politicians and monetary chiefs are in unfamiliar territory.

For years, the Reserve Bank was being castigated for not generating enough inflation. Suddenly, now, there’s way too much.

Wages, however, have remained stubbornly subdued, squeezing spending power in what essentially is a real pay-cut.