SARAH FERGUSON, PRESENTER: "Earn or learn" is the Abbott Government's message to the youth unemployed. As part of the Budget crackdown on welfare, job seekers under the age of 30 will now have to wait six months before receiving unemployment benefits, and when they do, they'll have to work for it. Newstart will now no longer be available to people under 25, and instead, they'll be eligible for the lower benefit rate of Youth Allowance.

Youth welfare groups fear that the changes, in tandem with a loss of funding for outreach programs like Youth Connections, that thousands of young people could fall through the cracks. Matt Peacock reports.

MATT PEACOCK, REPORTER: These unemployed teenagers in Sydney's west are being told the bad news.

REBEKAH SHARKIE, YOUTH CONNECTIONS: Where there'll be periods of payment when you're doing work-for-the-dole, if you're not still in education, and then periods where there'll be no payments ...

MATT PEACOCK: In six months, the federally-funded Youth Connections network of specialised agencies that have been helping them back into housing, education and work will be closed. Jessie Slager, nearly six months pregnant, is frightened.

JESSIE SLAGER: I'm only young, I'm only 18. It's scary - it is.

REBEKAH SHARKIE: So what have you been doing this year on Youth Connections with?

JESSIE SLAGER: Um, looking for accommodation, um, because we have been couch surfing. We're not in a very stable condition.

MATT PEACOCK: Both Jesse and her partner Matthew Ellick left home young and dropped out of school.

JESSIE SLAGER: I'm really nervous with all the cuts to the education that we're going to be in a very low income, low socio-economic sort of situation for the rest of our lives and I don't want that, 'cause I grew up in that and I know how it feels. I don't want that for my child.

MATTHEW ELLICK: I applied for a Certificate III this week for commercial cooking 'cause I want to be a chef. Um, and, yeah, if they cut the payments, I'm not going to be able to do that and if they cut youth care. There's my future gone, right in front of my eyes.

JESSIE SLAGER: Everywhere wants someone with experience, someone with education, you know. I mean, I have a couple of certificates, but nothing that's going to get me a proper job with a proper salary, you know. Nothing that - maybe $400 a week and that's still not enough to rent a house with a child, you know. It's just not - it's not - can't do it.

MATT PEACOCK: The youth unemployment rate nationally is already more than twice the average. Under plans announced in the Budget, no jobless person under 30, unless they enrol in a course, will receive any payments for six months, after which they must work for the dole. After that six months, if they still don't have a job or aren't studying, it'll be another half-year of no payments.

DAVID THOMPSON, JOB SERVICES AUSTRALIA: The big hole that's been rent in the safety net is that for the first six months after somebody applies for income support when they are not working and not studying, they receive no income support. They're required to attend and engage with an employment service provider in Jobsearch, and in the event that they don't get a job and they don't go into any form of full-time vocational training, they spend six months without one red cent of income support.

REBEKAH SHARKIE: Well this is the first time in 20 years that the Federal Government has not committed to funding assistance for young people, the most vulnerable, disengaged young people in Australia, to help them.

MATT PEACOCK: For the CEO of the soon-to-be closed Youth Connections Network, Rebekah Sharkie, job service agencies simply can't cope.

REBEKAH SHARKIE: They say themselves that they don't have the skill set or the time or the style of program to provide the individualised intensive case management needed when you are presented with a young person that has serious complex barriers in their lives. If you are homeless, if you can't read, you can't write, you haven't been at school for three or four years.

KEVIN ANDREWS, MINISTER FOR SOCIAL SERVICES: This government believes that young people should be learning or earning - learning or earning. And that's why we're going to tighten access to unemployment benefits, the Newstart benefit for young people in Australia under the age of 30.

MATT PEACOCK: The Government mantra "earn or learn", say welfare agencies, ignores the plight of young people who don't have family support.

CASEY O'BRIEN, SALVATION ARMY: Many of the people who come to see us are already teetering on the poverty line as it is, so they're choosing between food or going to see the doctor or getting a train ticket to the job that they just may have. So basically, what these changes will do is make them prioritise even further between those things.

JESSIE SLAGER: I wanted to go to university. Not now, I don't. I can't afford it, I'll never be able to afford it, unless I win the lotto or something like that, you know. I want to go to TAFE, but again, the concessions have gotten higher. Even though I get a Centrelink concession, that's still $160. $160 out of $270 I get a fortnight. I can't afford that. I have other things. We need to eat, we need to be housed, we need to be clothed, we need medicine.

CHRIS RILEY, YOUTH OFF THE STREETS: Can the Prime Minister guarantee to me that all the young people who are taken off that benefit will get jobs? Can he guarantee that? Because there are 33 per cent in some suburbs of the youth who are unemployed, can't get jobs, want to get jobs.

MATT PEACOCK: Father Chris Riley, who's spent a lifetime working with street kids, has little doubt about one outcome.

CHRIS RILEY: What will happen if they're got no benefits for six months is that crime will certainly rise extensively. People aren't going to starve out there or go without, so they will - if we force them, the crime rate will go - escalate incredibly.

MATT PEACOCK: Because Jessie's soon to be a parent, she, like other especially disadvantaged young people, may be exempt from the new no payment regime, but she worries her friends won't be.

JESSIE SLAGER: And it's hard as it is. It is, it's really - it's scary, it's really scary. And for somebody that's going to go through this in a year's time - I'm sure I'm not going to be the only one - they're going to be left on the street. It's not humane. You can't do that to someone.

SARAH FERGUSON: Matt Peacock reporting.