Scarcely a day passes when political donations are not in the headlines: Treasurer Joe Hockey's lawsuit against Fairfax after it published an article about donations to the North Sydney Business Forum ; mafia donations to the Liberal Party; allegations that Opposition Leader Bill Shorten may have failed to disclose  funds flowing from the union he headed.

And then there has been the ongoing drip feed of revelations from the NSW Independent Commission Against Corruption that has lifted the lid on the murky world of how politicians and political parties blithely circumvent the donations laws.

The combined revelations have taken public trust in the political process to a new low and called into question the efficacy of Australia's donations laws.

As in most democracies, Australians are free to put their money behind their political convictions and donate to political parties, and this has become an important source of funding for parties. After the federal election in 2013, the Australian Electoral Commission paid out $58.1 million in public funding to parties but the amount raised by state and federal branches of political parties during the three years prior was in the order of $300 million.

Political donations can make the difference between victory and defeat in a tight contest in which money for advertising can be a decisive factor.

As a result, politicians of every persuasion are constantly on the hunt for donations. Being a rainmaker brings kudos and power within the party structure. Ministers who add star power to fundraisers hope they can count on the support of backbenchers down the track. For the aspirational politician, an ability to raise funds is a valued attribute in pre-selections.

At the simplest level, fundraising involves raffles, barbecues, online appeals and tapping the shoulder of  like-minded souls. At its more sophisticated it has evolved into complex arrangements including tiered membership of "forums" that facilitate access to cabinet ministers, intimate dinners with decision makers and glitzy functions costing upwards of $2000 a ticket.

But time and again, anti-corruption bodies have sounded a warning that political donations can be a serious risk.

Will a politician responsible for making a decision on policy be more inclined to treat a company favourably if it has coughed up thousands for the party? Is there an implied quid pro quo?

The problem is the laws in Australia don't operate very well, says Graeme Orr, professor of law at University of Queensland and an expert in this area.

"The federal system can be described as lackadaisical compared to overseas regimes," he says.

Donations laws are undermined by inconsistencies between the state and federal regimes, an unwillingness by the major political parties to tackle the problems, glacial timeframes for disclosure  and weak enforcement.

The hotchpotch

Part of the problem is the inconsistent rules between the federal level and states, which parties have exploited to game the system.

The federal donations laws require donations over $13,000 to be disclosed to the Australian Electoral Commission. There are no caps on the maximum donation.

Victoria has no separate disclosure regime for donations to state campaigns and relies on the federal rules to ensure disclosure of donations made. It means only large donations of $13,000 or more are reported. It's the same in South Australia and Tasmania.

In contrast, NSW now has tight caps on individual donations ($2000 for donations to candidates and $5000 to a party). Any donations over $1000 must be reported to the NSW Election Funding Authority. It also has overall spending caps during elections and outright bans on donations from particular sectors after a series of scandals involving the previous Labor government. Property developers, the alcohol and the gaming industry were singled out because the state government had a very direct role in approving developments and regulating these sectors.

Queensland and Western Australia also have some specific rules.

But the difference in state regimes creates opportunities for avoidance.

Professor Orr says it would be possible for a company to avoid disclosure by making up to nine donations to the state and federal branches of a party below the federal threshholds, though some parties, notably the ALP, voluntarily report smaller donations. This could be repeated by making donations as an individual.

There is no clear evidence of corporations deliberately doing this, but trying to assess the largesse of a corporation can be complex and involves adding up donations to multiple branches and often from separate entities.

One easy way round the NSW laws, as revealed in the ICAC, is for the party to ask property developers to channel their money to the federal campaign.

Use of fundraising bodies, unions

Third-party organisations are permitted to raise funds, but if they are associated with a political party or if they tend to support one side of politics then they are obliged to lodge a full disclosure of the source of their funds.

The Free Enterprise Foundation is a fundraising arm for the federal Liberal Party. Since it was set up in 1981, it has been used to provide a layer of anonymity to big donors to the party.

The recent ICAC Operation Spicer hearings revealed the Free Enterprise Foundation may have been used as a means of receiving and disguising donations from prohibited donors in the lead-up to the 2011 NSW election campaign.

Federal Treasurer Joe Hockey also made headlines, and sued Fairfax over articles about the North Sydney  Business Forum, a fundraising body which Fairfax said offered memberships and the prospect of privileged access to the Treasurer. While Mr Hockey won damages on the publication of two tweets and a poster, Justice Richard White said the article describing the access offered as "privileged" was not wrong or inappropriate and the article raised important public interest issues.

There have also been questions about the use of unions by the ALP as conduits for donations.

ALP leader Bill Shorten has come under scrutiny in the Royal Commission into Trade Union Governance over payments made by the Australian Workers Union to his 2007 election campaign, while he was head of the union.

The fact that the Australian Electoral Commission was blithely unaware   of several breaches involving union funds points to an attitude among our elected representatives that the AEC is toothless and they have little to fear.

More broadly, the commission and Fairfax have revealed big licks of employer dollars being tipped into union coffers in questionable side deals, including for members dues. This allows unions like the AWU to boost membership, and clout in the ALP. This kind of behaviour not only raises serious conflict of interest issues within the union, but also points to the existence of large slush funds that could be used to influence the outcome of political contests that are beyond scrutiny.

Slow disclosure and lack of enforcement

In the digital age, some countries are now insisting on regular or even real time disclosure of donations. In Australia, most disclosure bodies only publish annual returns and returns six months after a poll.  The exception is NSW which published all donations made in the nine months prior to the March election before polling day.

But enforcement and regular audits remain a black spot. Despite the revelations in the ICAC and the royal commission there have not been any prosecutions for breaches of electoral laws.