Scott Morrison has been driven by his time as social services minister to come up with a new plan to get young people into jobs.
"I see what it does to those young people when they are resigned to a life of welfare," he told reporters in the budget lockup.
"We want to give them choices by empowering them to get jobs,"
He said he had spent a lot of time with welfare organisations and businesses in the portfolio he held before taking over as treasurer, and learnt that the work for the dole program wasn't working.
"I've listened to business people who have said they want to give young people a go but they don't want to shoulder all the risks and all the costs of giving them a go."\
The federal budget includes $840 million for a new youth employment package that links businesses with 120,000 young people on the dole who are eligible for a government internship program.
But first jobless youth must undertake six weeks of job-readiness training, including classes on presentation and how to work in a team.
A four to 12 week internship could follow at a business such as a newsagent or supermarket.
This opens the way to an extra $200 a fortnight on top of the Newstart allowance to work 15 to 25 hours per week, and businesses that host the interns will get $1000 per person.
"This is real work for the dole," Mr Morrison said.
Businesses that hire anyone who's been on the dole for more than six months will get a $6500 to $10,000 wage subsidy.
The government has also softened its mandatory work-for-the-dole requirements.
Instead of having to work for welfare after six months on income support, young people now have a year.
However, a 2014 budget plan to make young people wait for welfare payments remains government policy.
It's understood the unpopular proposal, which was watered down in the 2015/16 budget and has failed to pass parliament at least once, could still be revived by the coalition.
