I think English should be compulsory, but not be vital to the calculation of ones ATAR (reasons cited by other users).
However, HSC English needs to be improved. I wish that it was about the power of language, how literature shapes and reflects history and politics, the importance of communicating well, the different meanings words and images can have, etc. Instead its about memorising quotes and dull interpretations. Why is the study of literature- which is important- be so boring? When 'texts' such as books and movies are so exciting? I'm studying English at university, and it inspires me to 'look closer' and always be analytical. How a subject that prides itself on being creative and brimming with passion is so dull... I have no clue.
What separates English from Modern History and Geography is subjectivity and creativity. In both high school and university English, I felt I could be both creative and analytical. Those are two seperate skills. In Modern History, I have to be analytical all the time. There's less room for open and fanciful interpretation. As much as I love history, it is more narrow in what skills it tests. Sure- there is room for creative thought in other humanities. But not to the extent that English offers. Why is it important to study fictional and subjective works? Because we, as human beings, are not objective people. We construct narrative interpretations of the world around us, and fiction is a mirror to that. It's important to study. Yes, that boring Shakespeare play is actually, quite fun and intellectually enriching.
To sum up, a good HSC study program would involve rational & logical intellect (Maths, Science) as well as creative thought (English). A good student would apply critical thinking to both fields, and supplement their studies with subjects that interest them (ranging from arts to economics). By all means, play to students strengths- but be fair about it.