NCEA is being blamed for the decline in students' literacy and numeracy skills.
The New Zealand Initiative's new report, Spoiled by Choice, suggests the system is failing those who need help the most by letting them pass courses with little knowledge or skills.
It criticises the NCEA system for pretending "all subjects - from meat processing to mathematics - are equal".
"At the moment it's perfectly possible to pass through NCEA without being functionally literate and numerate, and it is time we raised our expectations," says author Briar Lipson.
"Well-advised or motivated students can still achieve a broad and valuable education. However, for poorly-advised or less motivated students, NCEA also offers a plethora of 'safer' alternatives. These will maximise NCEA success by avoiding academically challenging content."
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This is possible because similar credits are doled out for subjects as varied as physics and tramping, and the way NCEA is graded means teachers are under pressure to teach to the test, rather than ensure students understand what it is they're learning.
She's calling for NCEA to be abolished, or at least an alternative offered.
"We will continue to see a worsening of the gap between children who are well-advised and come from aspirational, motivated homes, and our disadvantaged children."
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The report shows 15 years of sustained decline in performance at schools when measured against international standards - in contrast to NCEA's official statistics showing a gradual improvement.
While Māori and Pasifika students have seen their pass rates rise significantly under NCEA, the New Zealand Initiative says they're falling further behind other students when it comes to achieving university entrance.
"This reality is a direct consequence of NCEA's flexibility and underpinning principle of parity of esteem," the report claims.
The report calls for an end to internal assessment - presently more than 70 percent of academic grades are internally assessed, and it's suggested this means students only learn what the teacher knows they're going to be tested on. In an external exam on the other hand, anything could come up - so students would be required to have a depth of knowledge.
"If we carry on with the status quo, we will continue to see students' performance slide down the international league tables."
The report also calls for a drastic reduction in choice for students, so they can't avoid difficult subjects.
"The Government should signal higher expectations of the breadth of core subjects all students must master in school," says Ms Lipson.
Teachers welcomed the report, saying they would like to spend less of their time marking and grading.
Education Minister Chris Hipkins told the Sunday Star-Times scrapping NCEA altogether wasn't an option, but he's open to "big changes".