Foreign Minister Julie Bishop insists Australia is not turning a blind eye to Nauru's ailing democracy and declining rule of law because of its immigration detention centre interest.
The tiny Pacific island nation heads to the polls on July 9 and Ms Bishop said Australia would provide election observers to Nauru if asked.
"If it seeks international observers, Australia would be a country that would obviously seek to do so as we have in the Pacific in the past," Ms Bishop told the National Press Club on Tuesday.
New Zealand's government last year suspended the $1.2 million of aid it gives to Nauru's justice sector over concerns about the deterioration of civil rights and the rule of law.
Opposition MPs were arrested and one, Roland Kun, has had his passport cancelled, which prevents him from travelling to New Zealand to be reunited with his wife and young children.
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Five opposition MPs have been suspended from taking their seats in parliament for the past two years over accusations of treason for talking to foreign journalists.
Nauru's government also sacked its Australian magistrate Peter Law and chief justice Geoffrey Eames in 2014.
Ms Bishop maintains she has raised concerns with President Baron Waqa directly.
"The issue of the detention centre on Nauru does not affect my ability nor my desire to raise issues of concern," she said.
Labor's foreign affairs spokeswoman Tanya Plibersek said Australia needed to do more to support strong political systems, good governance and anti-corruption right across the region.
It was an undervalued part of the aid budget, she said.
