The middle tier of English in Australia is generally called "Communications English" or some such derivative (read: Pretty Pictures English). For the final year of high school, you require at most to pass or even acquire a good mark, functional illiteracy.
This may be true. However, you referred to passing with flying colours, which is exceptionally difficult, due to the obtuse English course. Maybe it's not the same in other states/territories, but it is in NSW.
You are required to write a basic essay (literacy is optional)
Poor literacy is frowned upon, but is not the main object of the idiotic course. The main object of the course is seeing what you can infer, and twist, from a range of texts, not including Dan Brown books, or Harry Potter, if you want to pass with 'flting colours'.
have some basic drawing skills and primary school level English (you get the choice of making a picture book for an assignment)
In NSW, the course is made up of three modules and an area of study. The area of study contains assessment tasks on comprehension and shorter answers (visual, auditory, or the conventional reading types), creative writing, which is just writing a short story responding to a stimulus material, and a text type response (invariably always an essay) about a set text and at least two texts of the students own choosing. The first of the three modules is purely an essay topic. It relates to context in texts, and the connections between texts. These texts being set by the NSW Board of Studies (BOS), and not containing such works as Angels & Demons, or The Goblet of Fire, but John Donne's poetry, Jane Austen,and the W;t, for example. These are, I imagine, by any measure, reasonably accepted literary works. The second module is a critical study of text, and can be comprised of one of a number of options chosen by the school, such as the study of famous speeches, poetry, prose fiction, drama, or film (which I will come to in a moment). The third module is a study of conflicting perspectives. It, similarly, involves the study of set, and reputable, texts by the BOS, eliminating any ability to fudge the exam with a poorly selected text, which would invariably gain lower marks anyway.
And none of these modules have any picture book assessment task.
and you get to watch a movie and must provide "this is what happened to this character LULZ" responses.
If an essay response consists of a synopsis, or mere description to the plot, without frequent reference to techniques used, followed by examples of those techniques, and showing their relation to the question and the module, or area of study theme, then they will not gain many marks at all. They would be Band 2 or Band 3 responses. There are six bands. This is hardly, as you put it, passing with flying colours.
Now I have no idea where this came from. But it is blatantly incorrect. Advanced English has, in fact, two HSC exams, compared to the standard one for every other subject (excluding subjects with both practical and theory components).
This has led to teachers passing functionally illiterate people for the sake of keeping the marking average up (the external marking of final assignments only allows the markers influence over 10% of the mark)!
In 2008, 10% of candidates received a Band 6 in Advanced English, whilst 40% of students received a Band 4 (not a flying colours mark). This can be compared to 17% of candidates receiving a Band 6 in Advanced Mathematics in the same year. This is clear evidence that English is not a subject in which marks are given away. It has a reputation of being the hardest 2 unit subject in the HSC, and for good reason.
Simply speaking, you can be functionally illiterate and pass it.
If you were illiterate, you would not be in the Advanced English course. You would either be in the Standard English course, or the ESL course. And this doesn't mean they take pity on you. In Standard English last year, less than 1% of candidates received a Band 6, and just over 3% in ESL.
As for passing, to be functionally illiterate means that you cannot read or write. If you cannot read the exam questions, you are not going to pass. If you cannot write the answers, you are not going to pass.
This is endemic in Australia as an educational whole and it's a trend that began in the mid 80ties, according to an ex-English teacher friend of mine. It was decided that failing people looked bad, so they dumbed down the system, the next batch of students were worse, so they again dragged down standards and so on. The number of functionally illiterate people, who cannot write, do not understand sentence structure, do not understand punctuation, cannot spell and are effectively useless except for manual labor and the services industry is a national shame.
Well, this point does hold some water. Yes, there is a lack of emphasis on the basics of English in the English courses now, which can lead to a certain level of illiteracy. But it is still, on the grand scale of things, not exceptionally widespread.
And the dumbing down of the syllabus is probably not the best description. I would call it more of an abstraction, and a ridiculous one.
The point of this post was not to defend the moronic, eccentric and mindless NSW English syllabus, but to point out that it is not, as you said, a case of passing with 'flying colours' through the use of populist texts, and with illiteracy.
And if you're going to use the argument that everyone technically passes, because the HSC isn't something that you fail, as such, then I mean it more in the way that a bad mark is what I would consider a fail.