But a ''wholesale retreat'' from policies to cut the cost of raising children and reduce the trade-offs between career and motherhood could cause long-term problems.

The warning came from the Productivity Commission, which is conducting an inquiry into paid maternity, paternity and paternal leave.

The commission issued its report on recent trends in fertility yesterday.

Co-author assistant commissioner Ralph Lattimore said about 285,000 babies were born last year.

The fertility rate was 1.93 babies per woman, the highest since the early 1980s.

''Much of the recent increase in the fertility rate is likely to reflect the fact that over the last few decades, younger women postponed childbearing and many are now having these postponed babies, so-called recuperation,'' he said in the report.

''This has shown up as higher fertility rates for older women.

''However, some of the increase is also likely to be due to a quantum effect, an increase in the number of babies women will have over their lifetimes.''

Increasingly generous family policies such as the baby bonus, child-care subsidies and Family Tax Benefit A were likely to have played a ''modest'' part in the process.

About $240,000 was the direct cost of raising one child but these policies had only reduced the bill by 3 to 4 per cent.

Families Minister Jenny Macklin said the paper pointed to ''concerning'' increases in fertility rates among 15- to 19-year-olds in the Northern Territory and South Australia since 2004.

''For this age group there has been a 7.2 per cent increase in fertility rates in the Northern Territory and a 3.2 per cent increase in South Australia,'' she said. ''This period coincides with the introduction of the baby bonus and the paper suggests the baby bonus may have stimulated teenage pregnancies in the Northern Territory.''

Mr Lattimore said Australia's rising fertility rate also reflected the ''buoyant economic conditions''.

''Overall, Australia appears to be in a safe zone of fertility ...'' he said.

But he warned the country would face problems if it moved out of that fertility ''safe zone''.