The outgoing governor general, Quentin Bryce, was given an opportunity this week to join a distinguished and exclusive group of Australians – those who have refused knighthoods.

Prime minister Abbott's decision on Tuesday to reintroduce the titles of knight and dame in Australia has been ridiculed as a step back to Australia's colonial past – the era of the cringe, of mother England, and of regarding as inferior achievements ungarlanded by imperial approval.

But the truth is that knighthoods have never been uncritically accepted in Australia. Far from constituting a "grace note in our national life", as Abbott has suggested, the titles system has a long history of dividing Australians.

Even before "Australia" existed, colonial politicians saw the existence of knighthoods as incompatible with the kind of society they wished to create here. In 1873 Victorian chief justice George Higinbotham called it "a base, contemptible distinction" which gave a man nothing more than "a handle to his name". (His refusal to accept one meant that no other judges of the court could be offered one either, "to the mortification of their wives", according to the English Daily Chronicle).

A contemporary of Higinbotham, the politician and educator Charles Pearson, wrote that "no man who values political influence in Victoria would now venture to accept a knighthood". The reputations of politicians who did accept one, such as former Irish nationalist Sir Charles Gavan Duffy, never recovered.

It was Higinbotham who inspired Alfred Deakin's interest in politics. Deakin also refused the knighthood he was offered after serving as prime minister, as would all Labor holders of the office.

But it is not only those on the left who have questioned whether titles have any place in Australian life. The war correspondent and historian CEW Bean, a committed imperialist, did more than any other Australian to shape and promote the Anzac legend: it is to his dispatches from Gallipoli and the western front, his commemorative collection of soldiers' poetry The Anzac Book (1916) and his six-volume history of Australia in the great war that we owe our image of the Anzacs.

Bean saw the conferral of titled distinctions as inconsistent with the values of mateship, equality, democracy and larrikinism which he attributed to the Anzacs and praised as quintessentially Australian. These are values to which Tony Abbott is fond of referring. For Bean, "real nobility" belonged to the "ordinary, unpretentious Australian" who had fought at Gallipoli.

Quentin Bryce is a republican. It is disappointing that her vision of a fairer Australia – of which she spoke movingly in her Boyer lectures – includes titled honours. When the prime minister offered her the title of dame, she could have done no better than to refuse in the same gentle but firm terms as Bean, who, although he expressed his gratitude for the offer of a knighthood, wrote:

I have for many years held that in Australia the interest of the nation would best be served by the elimination of social distinctions, as far as is reasonably possible. Though I have the greatest admiration for many titled men and women and for their work and influence, it seems to me that in practice, despite certain advantages, the system encourages false values among our people, and that our generation needs above everything to see and aim at true values.

The outgoing governor general wishes to see an Australian child grow up to be a our first Australian-born head of state. It is in a society whose "true values" are not obscured by the social distinctions conferred by titles that she is most likely to get her wish.