Australia must set new education targets aimed at returning to the 10 top rankings among developed countries for key subjects, or else risk a chronic skills shortage, a peak business group says.
It calls for a lift in standards to reverse the decline in students' performance and for a careers counsellor to be placed in every school to help meet future demand.
Doing this will help tackle the skills gap and boost productivity, according to the Business Council of Australia.
Data taken from the Organisation for Economic Co-operation and Development shows Australia's education performance had fallen since 2006.
While Australia was once ranked sixth for reading and science, and eighth in mathematics, it slipped out of the top 10 for two of the subjects in 2022 and was 10th for science.
Council chief executive Bran Black said the trends were a major concern for the nation's economic prosperity and jobs pipeline if things weren't improved.
"We can't be a leader in AI, digital skills and a developer of new technologies in advanced manufacturing if we're not equipping our students with the basic skills and education required to take on those jobs," he said.
"Every student should have access to a careers counsellor, and advice must be modernised, standardised and accessible to help students identify future job opportunities and equip them with knowledge about the skills they might need to have the best shot at success."
Mr Black said year 12 retention rates were also an issue with current data showing only 79 per cent of students staying on to that year - the lowest rate in 12 years.
A greater focus on early primary school intervention and support for students who have been identified as needing help was essential, he added.
