The former treasurer's call for Australian couples to have another child "for the country" appears to have paid off, with a spike in the birth rate.
The number of births in Australia every year has been knocked out of a rut which had continued since the mid 1990s, when between 255,000 and 260,000 babies were being born per year.
In 2005, the year after then treasurer Peter Costello introduced the $3,000 baby bonus along with a parental call to arms, the birth rate climbed to 272,000.
It rose again in 2006, hitting 282,000 births taking in both babies naturally conceived and through in-vitro fertilisation (IVF).
University of Sydney researchers at Royal North Shore Hospital have been investigating the rising rate of births in NSW.
"Whether it has encouraged couples to increase their family size or just change the timing of a birth is yet to be seen," they write in the Medical Journal of Australia (MJA).
"But the results of this social experiment suggest that financial incentives do affect birth rates."
Samantha Lain and colleagues also identified which Australian women have been having the extra children, and they raise concerns over the rising number of teenage pregnancies.
While the research indicated there were only about 40 additional teenage mums a year after 2004, from 1997 to 2004 teenage births had been declining on average by 125 births a year.
"As pregnancy and childbirth in teenagers are associated with adverse ... outcomes, the increase in births after the introduction of the baby bonus is of concern," the authors write.
"And (it) follows a steep decline in teenage birth rates in the years before 2004."
Women who showed a "significant increase in first births" after the baby bonus were teenagers of average socio-economic status, but also those in rural areas in their teens or early 20s, and "average or advantaged" women aged 30-44 who lived in city areas.
For women who already had one child but then had another the increase "occurred predominantly among younger women of low and average socio-economic status", the authors write.
The increase in third or subsequent births occurred across all ages.
Contrary to popular criticism of the baby bonus scheme, the authors "did not find ... the increase in births only occurred in low socio-economic or disadvantaged groups".
The overall rise in births in Australia takes in both naturally conceived children and those born as a result of IVF.
A second study also published in the MJA said it was IVF babies who represented better value, in terms of the cost to taxpayers of boosting the birth rate.
On combined 2005-2006 figures, the baby bonus cost government $1.7 billion and it resulted in 37,000 extra babies.
It means the total cost of every additional baby was $45,000.
"Medicare rebates for IVF births in the same period were $295,000, which works out at less than $20,000 for each baby," said Professor Robert Jansen, a director of Sydney IVF.
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