A centrepiece of Malcolm Turnbull's re-election platform, the budget's PaTH interns program, breaches current minimum wage standards and would require changes that would either blow out its cost or see it stalled in a hostile Senate, according to employment law experts commissioned by the ACTU.

Legal advice sought by the peak union body suggests the PaTH program, (Prepare, Trial, Hire) which proposes to pay under 25-year-old jobseekers a $200-a-fortnight top-up over and above the dole, would leave vulnerable interns languishing below the legally enforceable minimum wage and potentially able to sue for recovery of unpaid wages.

Currently a single childless jobseeker on Newstart gets $263 a week, which would rise to just $364 a week despite 25 hours of work per week.

The $840 million program forms a central plank of the Turnbull government's jobs and growth package.It features generous $1000 incentive payments to employers in the intern phase and $10,000 employer payments in the hire phase, raising concerns of a perverse incentive for employers to churn through interns.

But if the legal advice is correct, the program is not legally sound in its current form and would necessitate changes to the Fair Work Act, or have its subsidies increased to meet minimum wage rates, adding hundreds of millions to its cost.

While concerns of exploitation and systemic abuse have been raised by unions and the group Interns Australia, the advice from the firm Maurice Blackburn is the first authoritative argument that it is technically illegal.

The ACTU argues it "would require new legislation to legalise a second-class category of $4-per-hour workers and remove those employees' basic rights under the Fair Work Act".

It says fixing the problem to bring interns's pay up to the legal minimum would "blow out" the cost of the PaTH program by $478 million.

"The government's plan is either very badly designed and underfunded, or very well designed to exploit Australian workers and strip them of their legal rights and pay," said ACTU president Ged Kearney.

"Not since the 1990s has it been legal to pay workers as little as $4 per hour. This policy takes employment standards in this country back almost 30 years and has the potential to drag down wages and conditions for all workers – not just those in lower-paid jobs.

"For a government to change the law to allow big companies to pay workers $4 an hour, while stripping them of protections and entitlements under the Fair Work Act is one of the heaviest betrayals of Australian workers since WorkChoices."

Legal academic Andrew Stewart, who is Adelaide University's John Bray Professor of Law, said it appeared there were problems with the hasty design of the scheme.

"It certainly appears that important details had not been worked out because this was announced last Tuesday with some information but nothing about safeguards and nothing about the operation of the Fair Work Act; nothing about the relationship to the National Work Experience Program and since then what we've seen is a drip-feed of announcements by a combination of minister and department officials in Senate Estimates, which, to me, suggest that the government has been sorting out details on the run," he said.

Professor Stewart said the difficulties arose because of ambiguities in the legal status of the relationship between intern and the firm - with the added complication of other parties such as the government and the job service provider. He said unlike the National Work Experience Program, in which people participated in purely voluntary work without pay, the PaTH scheme appeared to create an employment contract.

And that brings with it minimum standards in wages, safeguards, and insurance. However, he said there was little supporting detail on these areas at the time of release.

Defending the scheme last week after its budget day unveiling, Mr Turnbull rounded on Labor and unions for standing in the way of a chance to "change a life" by exposing a young person who had never worked, to the experience needed to get a job.

"You take a young person who is unemployed, who is perhaps unemployable, and you make them employable you change a whole life ... the life of their partner, the life of their children," he said

Questioned on the aspects of the program, Department of Employment secretary Rernee Leon had said employers would be kicked out of the scheme if they abused it.

"If an employer is making a habit of churning people through subsidised placements we would stop referring to them," she stated.

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