The Australian Electoral Commission has released its annual figures on political donations but much of the real action remains hidden due to Australia's political donations laws, which are among the laxest in the Western world.

So why don't the figures tell the full story, and what can be done to change that?

You can make large donations without declaring them

In Australia parties and donors only need to declare donations above $12,800. That means any money below this amount is private.

And $12,800 is just the beginning for those looking to splash some cash around and avoid public scrutiny.

That declaration limit only applies for donations to a single branch or arm of the organisation. Donate $12,799 to the federal Liberal Party (or Labor Party if that's your preference), and then another to their Victorian brethren and you're under no obligation to declare it.

With the major parties having a branch in each state, as well as a federal arm, this opens the door for private donations on a much larger scale.

However, it should be noted that Labor and the Greens voluntarily declare any donations above $1,000.

And then you have to factor in 'associated entities'

As well as giving to political parties directly, donors are also able to channel their money through associated entities.

These are organisations with links to a political party, such as unions, think tanks, or dedicated fundraising groups. They accept donations and then pass those on to the relevant party.

As well as giving donors another avenue to stay below the $12,800 cap, they are also typically subject to less scrutiny than the political parties themselves.

While the AEC does publish details of donations to associated entities, they're not available in a single list — making it more difficult to track the flow of money.

There's a long lag before donations are made public

While the donation records released today offer all sorts of insights into who is giving money to whom, they are all from the 2014-15 financial year — which ended seven months ago.

So we are none the wiser about what is happening any closer to this year's federal election and won't be until well after Australia has voted on who its next government should be.

This lag in disclosure minimises any political fallout of donations, and instead relies on the public (and the media) being able to join the dots about why donations were made many months after the fact.

On August 21, 2013, Tony Abbott announced the Liberal Party would no longer welcome donations from tobacco companies but just two days later the Victorian branch of the party accepted $5,000 from Philip Morris.

While this information emerged in the February 2015 release of data, it would have caused a far greater headache for the party if the information was released at the time — rather than more than four months later.

In parts of the United States, real-time disclosure systems are already being used, with details of donations available to the public within 48 hours.

But in Australia the only suggestion that comes close to that is a Senate committee recommendation from 2011 that donations greater than $100,000 be made public within two weeks.





Australia's rules allow anyone to donate

Unlike in Canada — where unions and corporations are no longer allowed to donate to campaigns — in Australia anyone can make a donation.

There have been some attempts at restrictions, in particular in New South Wales where property developers were banned from making donations after a series of scandals involving political favours.

But until measures like this are implemented across the country they're relatively ineffective.





Donors exploit differences in the system

Donors have also used associated entities to circumvent restrictions that individual states put in place.

After NSW banned developer donations, members of the Liberal Party channelled banned donations through a federal body called the Free Enterprise Foundation, which then donated money on to the NSW Liberal campaign.

This method was exposed during the Independent Commission Against Corruption (ICAC) investigation, which heard the majority of NSW donations to the Free Enterprise Foundation were from property developers, of which $700,000 was donated to the NSW campaign.

In the wake of the ICAC investigation, which claimed the scalp of NSW premier Barry O'Farrell, his successor Mike Baird implemented strict laws about donations.

Similarly in Queensland and South Australia efforts have been made to increase oversight, but reform at a federal level has stalled, and without a national set of rules it remains relatively easy for those looking to avoid scrutiny to slip through the cracks.





There's no oversight for how the money is spent



Once political parties or individual members receive donations, there is very little information available on how that money is spent — including the significant public funding given to parties based on their performance at previous elections.

In a 2011 Senate committee report on electoral reform highlighted how little oversight there was, noting that a "survey of the candidate returns for each election on the Australian Electoral Commission website indicates that candidates endorsed by political parties, with a few exceptions, generally lodge 'nil' returns".

"This is because, apart from where they use their own money or receive donations directly, all expenditure is incurred through the endorsing political party. There is thus no way in which information regarding this expenditure is made public," the report said.

The report went on to clarify that while the requirement for political parties to provide expenditure details was once in the Electoral Act, but it was removed after the 1996 election.





So what can be done?



The Senate committee report outlined a number of ways to overhaul electoral funding and increase transparency, but so far no progress has been made in turning these proposals into federal law.

The recommended changes include:

reducing the disclosure threshold to $1,000 and removing the indexation which has seen the disclosure level rise;

reducing the disclosure threshold to $1,000 and removing the indexation which has seen the disclosure level rise; an end to 'donation splitting' by treating donations to related political parties (such as federal and state branches) as a single total;

an end to 'donation splitting' by treating donations to related political parties (such as federal and state branches) as a single total; forcing parties to report large donations of more than $100,000 within 14 days.

Coalition members of the committee released a dissenting report, criticising the call to reduce the disclosure threshold to $1,000 — saying it would "significantly impact the ability of individuals to give donations to political parties without the potential for intimidation and harassment".

They also criticised a proposal to change the definition of a gift to include fundraising activities, which sit within a grey area of the law and allow access to ministers and MPs without individuals having to declare them.

Beyond what the Senate committee recommended, Australia could also follow Canada's lead and ban corporate donations, or put a cap on donations and spending as is the practice in the UK.

But thus far efforts towards reform have failed to make headway.