See the links for references

If you have shares for which you get paid dividends and those dividends are franked, and your financial situation is such that you pay no tax, you will actually get paid be the Australian Taxation Office (ATO). It is NOT a refund because you have not paid any Tax such that it would entitle you to a refund. It is like a reverse tax. See tax offsets below

Some people put forward the arguement, that the company you receive the dividends from, have actually paid the tax for you.

Although that may appear to be the case, from a financial, legal and tax point of view, it is not.

Companies are a separate legal entity from their owners, and hense have separate legal obligations to pay tax.

From a financial accounting point of view, a company calculate it's profit by subtracting it's expenses from its revenue to derive how much profit it makes. Based on the profit and the tax laws, certain tax has to be paid. That tax has nothing to do with the shareholders of the company. The company is completely unconcerned about what the personal tax situation is for their shareholders.

After the tax has been paid, the directors of the company make a decision as to whether, and how much of, a dividend will be paid to shareholders.

The company is paying company tax, that is legally required to. Companies do not pay personal tax. So at no stage is the company paying tax on behalf of its shareholders.

Unlike tax deductions which reduce an individual's taxable income, tax offsets reduce the amount of tax you pay.

An individual's income, less deductions, gives ther taxable income which is used to calculate ther tax. After the tax is calculated tax offsets are used to reduce the amount of that tax

All tax offsets, other than franking credits, can only reduce a person's tax liability to zero. An individual cannot use such tax offsets to make their tax liability negative and so get cash from the ATO.

As an example,This ATO web page, states “The low and middle income tax offset and low income tax offset are non-refundable tax offsets so the unused offset can't be refunded.”

The exemption is because the Liberal government of John Howard, at the time, changed the law, to make it so it is, today.

That depends a lot on your political persuasion and what you think is fair. If you getting some benefit from something you probably think it's fair. If you're not, you probably think it's unfair.

The Logical extensions of getting a cash refund for franking credits is getting a cash refund for all tax offsets.

Taking that to the next level, is that anybody that has tax deductions more than their income should get a paid by the ATO.

Going one level again, companies that have very little or no income but have lots of expenses and therefore make large losses should be able to get cash from the ATO.

Then ther wouldn't be much incentive for anybody to make a profit. But then, neither would there be any tax revenue to distribute to the people that are making the losses.