From January, new jobseekers under 30 will have to wait up to six months before receiving unemployment benefits, and will then have to participate in Work for the Dole.
They will have to do at least 25 hours per week of Work for the Dole activities in order to receive payments for six months.
The new Work for the Dole program will be phased in from July, with job seekers aged between 18 and 30 years, who have been unemployed for 12 months and receiving payments, forced to do 15 hours per week for six months.
The changes will apply in selected areas for the next year until the program is expanded in July 2015.
Also from next year, unemployed people under 25 will no longer qualify for Newstart and instead will have to apply for the lower benefit rate of Youth Allowance.
The changes will save the Government $1.2 billion over the four-year forward estimates period.
"We sell our young people short if we allow them to drift into welfare dependency," Minster for Employment Eric Abetz said in a statement released in the budget lockup.
"The new Work for the Dole program will help young job seekers gain the skills and experience they need to move from welfare to work as soon as possible, while also making a positive contribution to their local community."
Students to pay more for higher education
Under changes to higher education, more students will receive financial help, but they will also have to pay more for their degrees.
Universities will be able to set their own tuition fees from 2016, which will inevitably allow some course costs to rise.
The Government is also increasing student loan interest rates to reflect the cost of Government borrowing. The rates will be allowed to rise to up to 6 per cent, instead of being set at the the rate of inflation - currently sitting at 2.9 per cent.
And from July 2016, students will have to pay back their loans sooner, with repayments starting when they earn over $50,638 a year.
For students already studying, existing arrangements will remain until the end of 2020.
But for the first time, the Federal Government will provide financial assistance for all students studying diploma and bachelor degree courses at approved higher education institutions, including TAFE and private colleges.
And, from July, those learning a trade will also be able to apply for loans of up to $20,000 over a four-year apprenticeship. But apprentices will lose grants offered under the $914 million program Tools for your Trade, set up under Labor.
"We give people loans to help them complete a university course, so it is only right that those completing a trade qualification get the same fair go," Treasurer Joe Hockey said in his speech to parliament tonight.
Mr Hockey said Australia's higher education sector was currently being held back and was unable to compete with the best in the world.
"With greater autonomy, universities will be free to compete and improve the quality of the courses they offer," he said.
Universities will be required to put 20 per cent of their extra tuition revenue towards a new scholarship scheme to help those from disadvantaged backgrounds get a degree.
Loan fees for FEE-HELP and VET FEE-HELP will also be removed for undergraduate students.
And a new website will be set up next year, similar to MySchool, to compare universities, employment outcomes and student satisfaction.
Mr Hockey says Australia should aim to have at least one university in the top 20 in the world and more in the top 100.
"We must build an education and training system that becomes the envy of the world," he said.