At least a third of Year 8 students failed to meet maths and writing standards last year, Ministry of Education papers show.
Documents obtained under the Official Information Act show just 65% of the students met the standards, prompting the ministry to warn the Government its goal of raising NCEA pass rates to 85% by 2017 is at risk.
The briefing papers to Education Minister Hekia Parata said Year 8 achievement across all three standard areas was low. Those students would study for NCEA level two in 2016, but their results last year indicated that they would not have the literacy and numeracy skills to meet the target.
The papers also raise concerns over what effect labelling 25-35% of children in Years 1 to 8 as "not achieving" will have on their "educational identity and future aspirations, even if they are making progress".
They suggest considering lowering the standards at Years 7 and 8, where rates of achievement are lowest.
However, Ms Parata told Radio New Zealand's Morning Report programme on Tuesday she did not believe the standards were set too high.
"About 70 to 75 percent of children are at or above but there are others who are not, and we need to ensure that those who are doing well continue to do well and those who are not, we focus on what will help make the learning difference for them," she said.
New Zealand Principals' Federation president Philip Harding said standards at Years 7 and 8 were set deliberately high.
"They've been set as aspirational and so it doesn't surprise us now that that is shooting the ministry in the foot and they're now having to talk further about that," Mr Harding said.
However, the system could backfire and parents could turn against it, he warned.
New Zealand Educational Institute spokeswoman Louise Green said standards had introduced a way of labelling which was demoralising.
"An issue for me with labelling at any stage, but especially as children get older, is that it's just so demotivating ... why would you try if you're still going to be not achieving the standard," Ms Green said. "National Standards were never trialled. They were never tested. We're in the middle of a trial now but it's a trial for everybody."
Tougher marking at intermediates
Tough marking by intermediate schools may be dragging down the national standards' pass rates for children in Years 7 and 8.
Just over half of the country's 100,000 children in that age group are at intermediates, which have lower national standard achievement rates than primary schools.
National standards pass rates plunge from 75% in Year 6, to 66% in Year 7 and 69% in Year 8. But at intermediate schools, the drop is understood to be sharper than in primary schools. The Education Ministry says the schools might be interpreting the standards differently.
Victoria University academic Michael Johnston and the Association of Intermediate and Middle Schools says intermediates are probably being tougher than primary schools.
The ministry says the problem should be reduced by a computerised tool to help teachers decide if children are meeting the standards.