Franking Credits or Dividend Imputation was first introduced by the Hawk/Keating Government in 1987. Prior to this introduction the Australian Taxation Office (ATO) would tax the company and then the investor on the same income/dividend effectively doubling up.
From the 01 July 2000 Franking Credits become refundable meaning once a tax payer had surplus franking credits above his taxation obligation they could refunded. Prior to 01 July 2000 any surplus franking credits were wasting meaning the ATO kept them.
More information can be found here http://en.wikipedia.org/wiki/Dividend_imputation