The Australian Capital Territory, New South Wales and Victoria are doing well, but there are fears young people entering the workforce from other states and territories are not equally well equipped.
NAPLAN results and international assessments show Australia's school education standards are either slipping or stagnant.
Problems in the classroom are now causing concerns in the boardroom, says the head of education and training at the employers' organisation Australian Industry Group, Megan Lilly.
"The ramifications are considerable. Australia needs the best possible human capital it can get for its future. And the major input to that is our education system, so we need to do the very best we can for all of those individuals now in the system and those going into the system to prepare them for work."
The disparity of performance between the states and territories is what is raising eyebrows.
According to the latest Program for International Student Assessment, or PISA, from 2012 the difference between the best and worst performing jurisdictions in reading and science literacy is equivalent to 1.5 years of schooling.
Ms Lilly says if the Northern Territory was assessed in isolation, it would rank among the bottom 20 per cent of OECD countries.
"The disparity has been there for some time. And it comes through in both the NAPLAN and PISA results. If you actually sort of look into those results you actually find that disparity consistently. And that's the cause of concern. It is not a one off. It is actually a longer-term trend."
The Australian Industry Group is calling for action to lift overall standards, and put an end to what it calls the two-speed education system.
Funding will play a major part, but how and where money is spent is always contentious.
That's as the federal government looks to replace Labor's Gonski needs-based school funding plan.
Education expert at the Australian Catholic University in Melbourne, Doctor Kevin Donnelly.
"It's very important whatever funding system we have in the future does look at the fact that there are certain states and territories that don't do as well and hopefully it would be a needs-based system."
He says changing the way schools are financed will not, in isolation, make schools equal.
"You really do have to look at the nature of the education system in each of the states and territories, the types of students in those schools. Whether they are isolated, or rural or in the city. And also their background."
In an highly-competitive era, Australia is expected to rely more and more on a well-educated workforce.
A workforce that the business community wants to see spread around the nation.
