they don't HAVE to apply for Youth Allowance, however they may be better off applying (financially speaking)

somewhere in the government wisdom, they think it costs less to raise a 16 year old than a 15 year old. the absolute maximum ftb you can get for a 16 year old is $51 (and some odd cents, but i'm gonna round for convenience). for a lower income family, even taking parental income into account, they may get more youth than the $51 (max youth for a child living at home at 16 is 208ish, parental income reduces that though) - the youth allowance can (and usually is) paid into the parent/guardian bank account as the "customer" is a minor. the more children over 16, the more the parental income is "spread" and the more youth allowance they'd get for the kids.

oh, yeah, for children over 16 they have to be studying towards or previously achieved year 12 or equivalent - if they haven't, you can't get ftb for them

hope that helps Tinks!