A number of schools are failing students and should be closed, ACT leader David Seymour says.
Mr Seymour said ministers "quietly" agreed that schools' performances should be measured and those that were failing should be shut.
A small number of schools were failing students "year after year, without consequence", he told Morning Report.
"And then we find we have 74,000 NEETs - not in employment education or training - between 18 and 24 in New Zealand. And these schools just go on.
"I'd very simply start measuring them on performance and if they don't actually get measured performance, start closing them."
He said a "sophisticated" measure of schools' performances should be made, taking into account students' circumstances and their progress, but ultimately the consequence of schools failing should be closure.
Mr Seymour, who is the parliamentary undersecretary to the education minister, said that view had some support from ministers.
"I think that quietly they absolutely believe that this is where we have to go," he said. "They are going to have start dealing with it."
Mr Seymour said employers do face the problem of potential workers failing drug tests - but the real failing was an education system that was not producing skilled workers.
Prime Minister Bill English said on Monday he heard from employers two or three times a week who struggled to find enough New Zealanders to fill job vacancies - in many cases because the applicants failed the drug test.
"The real failing is in an education system and a welfare system that lets people come out after a decade or so of state education, of $13,000 or $14,000 a year, without the basic skills to participate in the workplace," said Mr Seymour.
"Whether they're on drugs or not is not the issue."
He said poor teachers and principals were almost impossible to get rid of. "I think there are some teachers who are not up to task and they're almost impossible to get rid of as you'll hear from any board of trustees.
"We have a system that seems to be set up to preserve the jobs of adults in comfortable, well-paid jobs as teachers that fail students year after year," he said.