"For whatever reason – rightly or wrongly – the ATAR is leading to students being given poor advice," he told Fairfax Media.
"It’s completely obscure. As a tool for university selection, ATAR might be fantastic. But as a tool that guides students as to what they should choose, through the consultations we saw that it was very, very poor."
Experts have defended the integrity of the ATAR system but Dr Finkel said that did not matter because "the reality is not what it is but what it’s perceived to be".
"We did not come across anybody who was capable of explaining it to us, and there was no value for us to go and find out from an absolute expert because it doesn’t matter," he said.
"When you make something sufficiently complex – and it is – then the perceptions of it will necessarily be either confused or simplified or completely erroneous."
Dr Finkel's STEM report, which is under consideration by the country's education ministers, urged governments to review the ATAR but did not make specific recommendations.
The chief scientist said he was not certain of the solution but one "extreme" option would be to abolish the ATAR in favour of the US system whereby individual universities manage their own entrance schemes.
Alternatively, Dr Finkel said, "let's at least simplify the ATAR so that every single parent and every single teacher and every single career adviser can understand it".
However, the chair of the Technical Committee on Scaling in NSW, Rod Yager, said complexity was necessary if the calculation of student rankings was to be kept fair.
"Everyone wants us to have a system that is equitable, simple and transparent. Unfortunately those three things are mutually exclusive," he told Fairfax Media.
"In order to be equitable, one has to consider and make adjustments for a whole host of factors that take away the simplicity and the transparency."
The complexity was illustrated by research that found the scaling system had led to lower scores in some language subjects and contributed to the declining popularity of languages.
But Mr Yager denied the ATAR could be "gamed" or manipulated by strategically choosing subjects that were disproportionately rewarded by the system.
"That’s not how it works in reality. There is some perception out there that that’s what happens, and unfortunately people react to that perception," he said.
"Don’t play the scaling game. We work really hard to make sure that there is no advantage from taking one course or another."
But the two men agreed universities had erred by largely abandoning mathematics prerequisites for courses such as science and economics.
"There is no doubt that that has been one of the worst decisions that universities have made, in my opinion," Mr Yager said.
Michael Koziol is the immigration and legal affairs reporter for the Sydney Morning Herald and The Age, based in Parliament House
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