In reporting the Australian results of the 2006 Adult Literacy and Life Skills Survey (ALLS), the Australian Bureau of Statistics (ABS, Adult literacy and life skills survey, summary results, Australia, 2008a, p. 5) stated that of the five internationally identified levels of literacy and numeracy in the survey, Level 3 is regarded by the survey developers as the ‘minimum required for individuals to meet the complex demands of everyday life in the emerging knowledge-based economy’. In effect, this Level 3 criterion, in the wake of traditional functional literacy/illiteracy dichotomies, creates yet another ‘single measure’ through which to distinguish those who can from those who cannot function in society. The Level 3 criterion and the accompanying verbatim quote have since been cited extensively by powerful institutions, including government, industry and skills in their promotion of a crisis discourse in adult literacy and numeracy. This has led in turn to national policy responses on ‘foundation skills’ and nationally agreed performance targets (by the Council of Australian Governments) for skills and workforce development based on the ALLS Level 3. In this paper we question the validity, origin and significance of the Level 3 criterion and contend that highlighting this aspect in the reporting of the ALLS has resulted in a narrow and unbalanced perspective on the role of literacy and numeracy in society.