A number of recent national studies of student achievement in secondary school have reported differences between the Australian states and territories. State differences are often viewed as insubstantial or as simply reflecting sociodemographic factors, or differences between the states in the grades or ages of the students sampled. In this article, we show that state differences are larger than generally assumed and cannot be attributed to socioeconomic and demographic factors. Generally, student achievement in reading, mathematics and science are higher in New South Wales than the other states, once demographic and grade differences are taken into account. Of concern, is the increased likelihood that students from Queensland, Victoria and Tasmania have in only reaching the lowest OECD proficiency level in reading. We conclude that state differences are meaningful and do have policy implications. (Contains 5 tables, 1 figure and 2 notes.)