Australia's foreign language skills are declining. New figures show that only 13 percent of high school graduates can speak a foreign language - compared with more than 40 percent in the 1960s. Academics worry that this means Australia will increasingly be isolated from its economically important Asian neighbors. From Sydney, Phil Mercer reports.

The last census found that almost 400 different languages are spoken in homes across Australia, where a quarter of the population was born overseas.

In the 1980s the government gave special attention to teaching Asian languages in schools and universities as Canberra sought closer ties with its regional neighbors.

But increasingly it appears that commitment has waned, and Australia is less able to deal with its neighbors.

Figures show that only 13 percent of Australian high school graduates know a foreign language, less than half of those are proficient in an Asian language. Four decades ago, 40 percent had foreign language skills.

Research by Australian universities has shown that a monolingual country often performs worse in international trade and diplomacy.

Professor Elise Tipton from Sydney University says increasingly students do not feel the need to learn another language to boost their careers.

She believes that Australia's economic boom, which is driven by red-hot demand for its minerals, is helping mask serious deficiencies in its language skills.

"Even with the rise of China then I think there's something about Australia being a resource supplier. China comes to us. We don't really have to beat down the doors and learn their culture and language in order to get business," said Tipton. "Americans, if they want to do well in China, would have to work a little bit harder in terms of learning language and culture than Australians."

Australia does business very successfully in English with most of its trading partners.

But as the world's economic power shifts to emerging regions such as Asia, Australia's language gap could soon be exposed.

Dilip Dutta from the faculty of economics and business at Sydney University says that language skills can enhance trading opportunities.

"If you want to get trade with Asian countries it's very important that [they] learn the language which will help them to get closer to the culture, which will be easier to come up with some kind of trade negotiation or trade enhancement through close connections using their own language," said Dutta.

Pippa McCowage, a 22-year-old economics student, says many young Australians have a half-hearted approach to foreign languages, and that the language curriculum often is weak.

"While it is encouraged in high school to learn another language, it's not really seen to me as a realistic expectation that you will have to speak it," said McCowage. "For example, I learned Japanese in high school, went on an exchange in Year 10, so when I was 16, and found that the Japanese students of my age had a much greater proficiency in English than I did in Japanese. So in that sense it almost discourages you."

Classmate Rob Tyson blames Australia's geographical isolation for declining interest in foreign languages.

"There's a big difference between speaking it in class and having conversations with other people learning and then being able to spend a lot of time in a country where I have the ability to practice that conversationally," he said. "So it's not the same as being in Europe where you could pop across to France or you've got that inter-action or in some of the Asian regions where there is such a difference in dialect."

About 70 percent of Australia's major exports go to Asia and the government of Prime Minister John Howard has been keen to develop closer economic, diplomatic and security ties with Asia.

Academics say that as Asia becomes one of the world's economic powerhouses, Australia needs to improve its language skills if it is to take full advantage of the business opportunities on its doorstep.