They also tell a tale of a funding gap, as governments across the country came under fire over a lack of resources for the nation's schools.
Results from the National Assessment Program - Literacy and Numeracy (NAPLAN) for almost 1.3 million students in years three, five, seven and nine were released on Wednesday.
About one in three fell short of basic standards and roughly one in ten needed additional help across every year group.
Federal Education Minister Jason Clare concedes the education system can be "a lot better". (Mick Tsikas/AAP PHOTOS)
In both reading and numeracy, about one in three Indigenous children required more support compared to one in 10 non-Indigenous students.
A divide between urban and rural schools also emerged, with 24 per cent of students from very remote schools being rated as "strong" or "exceeding" compared to 70.7 per cent of students from major city schools.
"We have a good education system, but the truth is that it can be a lot better and a lot fairer - the NAPLAN results are proof of this," federal Education Minister Jason Clare said during Question Time on Wednesday.
While the results have generated shock and concern, Australian Catholic University associate professor Steven Lewis said it reflected a years-long downward trend.
"It's a tale of two student populations," the education policy expert said.
"The schooling system's serving students from advantaged backgrounds well, then there's a lot who are simply not being served.
"This should be a real wake-up call."
The states say more funding is needed from the federal government to boost education. (Bianca De Marchi/AAP PHOTOS)
Australians are often quick to lay blame on teachers and students when results like these are published.
But Prof Lewis says state, territory and federal governments must be equally held to account and urged them to fund public schools to 100 per cent of the Schooling Resource Standard.
The measure, which is based on a recommendation in David Gonski's 2011 review of the Australian education system, estimates how much total public funding a school requires to meet its students' needs.
And the NAPLAN results are a damning indictment on the failure of governments to fully fund public schools, Australian Education Union federal president Correna Haythorpe said.
"Australia cannot close achievement gaps without closing resourcing gaps," she said.
All states and territories have been urged to sign onto the federal government's Better and Fairer Schools Agreement.
The Northern Territory and West Australian governments have agreed, but other jurisdictions are holding out as negotiations continue.
The NSW government has asked its federal counterpart to increase its contribution to 25 per cent, from its offer of 22.5 per cent.
Without this lift, the state government cannot scale up pre-existing programs that help students, such as small group tutoring, NSW Education Minister Prue Car said.
"The Commonwealth government is not doing its bit and we need them to do that in order for us to roll this out everywhere to kids that need it and deserve it," she told reporters in Sydney.
The states have accused the federal government of not doing its bit for kids' education. (Dean Lewins/AAP PHOTOS)
Prof Lewis said it was an "inappropriate and unacceptable situation" that Australia's largest states don't commit to fully fund public schools.
"It's the state schools who are serving our least advantaged students and they're also the ones with the least funding and resourcing," he said.
Under the current agreement, the federal government pays least 80 per cent of the Schooling Resource Standard for non-government schools and 20 per cent for public schools.
Victorian Education Minister Ben Carroll has urged the Commonwealth to change the way it directs funding.
"If we are going to fulfil the dream of Gonski and have a needs-based ... education system, we need the Commonwealth to put a lot more funding into public education," he said.
Federal opposition education spokeswoman Sarah Henderson said reforms were urgently needed.
"We have to get back to basics in the classroom with evidence-based teaching methods," she said.
"Every Australian child deserves no less."
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