Leading child health advocate Professor Fiona Stanley AC has described results from the first Australian survey using the Early Development Index as alarming.
Professor Stanley, who today launched the document, said she was most concerned that Australian children had lower averages than their Canadian counterparts in every category.
"We've know anecdotally for some time that a lot of children are arriving at school without the necessary skills and development to begin their formal learning.
"What this study has done is confirm our fears that we are falling behind in this crucial area.
"Most worrying, this index is an important predictor of later problems and could well explain the rising rates that we're seeing in a range of indicators of child health and well being such as behavioural and learning difficulties, juvenile crime and mental health issues."
Professor Stanley said that there is overwhelming evidence that the paths that children start on during the first years of life will have life long impacts.
"I find it alarming that 26 per cent of these children were considered to be vulnerable in at least one of these crucial areas, and that 13 per cent were at risk.
"These children are already on a path to problems - that's not fair when you're just five years old.
"Our Australian children deserve to be given a fair chance to achieve their potential - and the bottom line is that we know what needs to be done, we simply haven't been committed to doing it.
"This is a wakeup call to our communities and governments. If we don't do better for our children now, then we will all be paying the price down the track when these children struggle in the education system and potentially emerge unemployable."
Professor Stanley has been an advocate of the development of the Early Development Index in Australia after witnessing its significant impact on policy and practice in Canada.
"The Canadians have made early development a national priority. The trend is also strong in other countries such as the UK with their Sure Start program.
"While there's a lot of good intentions here we're still tinkering at the edges. What these results indicate is a real urgency for more early intervention programs to support families and children at the community level.
"We need to particularly look at what's happening in the newer outer suburbs where young families needs far exceed the provision of services.
"Of course these issues are part of the wider debate about our nation's prioirites - what sort of investment we have in children and families, the changes that are needed to help parents to manage their work/family commitments and the provision of more high quality child care.
Professor Stanley said that while early intervention programs required a significant funding commitment, the costs of failing to act are much greater.
"Make no mistake, if we stay on this pathway we'll all be paying dearly as we try to support spiralling numbers in the justice and welfare systems.
"There's evidence that every dollar spent on these types of early prevention programs can save 7 dollars in treatment costs down the track - it makes both economic and social good sense."
Professor Stanley commended the North Metropolitan Health Service for its innovation and commitment in developing an Australian Early Development Index.
The Kids for Child Health Research collaborated on the project and is now seeking government and corporate support to see the Index developed and implemented at the national level.
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Professor Stanley is Director of The Kids for Child Health Research, CEO of the Australian Research Alliance for Children and Youth and 2003 Australian of the Year.