"Second point is that no other country in the world refunds franking credits."
You state the above as if it is a justification in itself. You seem to be questioning whether there should even be franking credits, but more especially you state it as a justification as to why franking credits shouldn't be refunded to non-taxpaying shareholders.
However, we could equally say, no other developed country has gone 25 years without a recession.
Should we have recession just to conform with the others?
There are all sorts of differences between countries' taxation systems.
US companies typically pay out much smaller dividends.
Consequently, share holders in US companies hope to be rewarded via capital gains rather than via dividends.
That shareholders in Australian companies are not rewarded via capital gains is evidenced by the fact that the XAO still languishes below its 2007 high, whereas the US indices have moved on from those highs.
The franking credit system has assisted capital formation in Australia by encouraging Australians to invest in Australian companies.
Arguably,perhaps too much so, given the lack of diversification and dominance of Australian shares in many SMSFs.
I am no fan of Scot Morrison but he actually explained the justification for the franking credit refunds quite succinctly in the time available to him in the debate.
The franking credit system, as introduced by Keating, meant that, for tax paying shareholders, the share of company profit distributed as dividends effectively became taxed only once, in the shareholder's hands, at their marginal tax rate. The refunding of unused franking credits introduced by Howard & Costello merely ensured that all share holders, irrespective of their marginal tax rate, are on the same footing given that they were taking the same risk, as shareholders.
Labor would be more justified to argue that Howard should not have made super funds in pension mode tax free. But Labor are not going there, not at least before the election, because that would lose too many votes. Labor would rather skewer a relatively small number of people that they figure will not vote Labor anyway. Labor's move is straight out of Jean-Baptist Colbert's play book. Labor are plucking a lot of feathers from a small number of geese and they hope the rest of the voters will not notice or care about the hissing.
If the cash refunding of franking credits is such an egregious wrong, why is labor prepared to continue doing it for recipients of a part pension?
Cheers
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