LITERACY levels of children and adults in remote Aboriginal communities are "seriously low" and many teenagers are likely to finish school with the reading and writing skills of a year 5 student.

A paper published today suggests the education gap between Aboriginal children in urban and remote areas is greater than the gap between Aboriginal and non-Aboriginal students.

"It is a significant, and perhaps understated, point that there is evidence that literacy levels can vary widely across remote Aboriginal communities," the Centre for Independent Studies' paper said. "Literacy is not a specialised skill; it is a necessary skill. Without it, adults in remote communities have their hands tied as actors in the modern economy."

According to the 2004 National Report on Schooling in Australia, 83 per cent of Aboriginal students and 93 per cent of students overall in year 3 achieved the literacy benchmark for their year level.

But Northern Territory Education Department figures show only 20 per cent of Aboriginal students in remote communities achieved the benchmark.

The national year 5 results showed that 70 per cent of Aboriginal students and 89 per cent overall achieved the reading benchmark. In remote NT communities, this was 21 per cent for Aboriginal students.

The paper's author, Kirsten Storry, said many parents in remote communities had left school without basic literacy and numeracy skills. This meant their children were less prepared for school. Any attempt to improve literacy needed to address the next generation of children and the community generally.

The paper recommends better reporting on literacy achievements and more comprehensive data about different groups of students — such as those in remote Aboriginal communities — to allow resources to be directed more efficiently.

It calls for an internet site to help share news about community education services, an expansion of School of the Air programs and encourages the private sector to set up schools or campuses in remote areas.

Our Lady of the Sacred Heart Thamarrurr Catholic School, in Wadeye, has been running a school for 27 students at remote Kuy for more than a year.

School co-principal Ann Rebgetz said students at Kuy were achieving good results.

"They are very strong on education, and the leaders within that community make sure the attendance is really good. But if I had better facilities, better equipment, a better student-teacher ratio, all of those things would make an enormous difference."