To assess the change in birth rates, both overall and in age, parity, socioeconomic and geographical subgroups of the population, after the introduction of the Baby Bonus payment in Australia on 1 July 2004.

Population-based study using New South Wales birth records and Australian Bureau of Statistics population estimates for the period 1 January 1997 – 31 December 2006.

All 853 606 women aged 15–44 years with a pregnancy resulting in a birth at ≥ 20 weeks’ gestation or a baby ≥ 400 g birthweight.

Change in birth rate in 2005 and 2006 compared with the trend in birth rates before the introduction of the Baby Bonus.

The crude annual birth rate showed a downward trend from 1997 to 2004; after 2004 this trend reversed with a sharp increase in 2005 and a further increase in 2006. All age-specific birth rates increased after 2004, with the greatest increase in birth rate, relative to the trend before the Baby Bonus, being seen in teenagers. Rates of first births were not significantly affected by the bonus; however, rates of third or subsequent births increased across all age, socioeconomic and geographical subgroups.

In the first 2 years after the introduction of the Baby Bonus, birth rates increased, especially among women having a third or subsequent birth. This could represent an increase in family size and/or a change in the timing of births.