Hi Raj, thanks for your question.
A policy is a plan of action to address and issue. Political parties develop policies about issues which they think are important in Australia. The government introduces most bills into the Parliament, which are ideas for laws which will put their policies into action. Those bills are considered by the Parliament, and if passed, are approved by the Governor-General as a new law for Australia. A law is called an Act of Parliament, which is administered by government departments. Laws are often referred to collectively as legislation. If you want to know more about how policy becomes legislation you might like to read our making a law fact sheet.