In Arctic regions, the residents used to wear coats made of seal skin which had pockets that were mercifully watertight. When intricate repair work needed to be done, the thick mittens worn got in the way. But, because of the below-zero temperatures, there was a risk of frostbite for bare fingers so it became usual to urinate into the pockets to provide warmth for workers - who would periodically dip their fingers in the pockets to revive them. Members of the lower social orders strove to be available to provide this service to the more skilled. Hence, pissing in somebody's pocket became a way of gaining favour.
Source - Sydney Morning Herald.
Thanks for your kind words DW.
I can in no way vouch for the veracity of the above though another possibility is that its a variation of "don't piss on my back and tell me its raining". Alternatives include leg, head and foot. I''ve always thought of it as being very Australian but that probably means Irish origins. Most of the best Oz humour comes from the Irish, who made up a goodly percentage of the original convicts sent her at His Majesty's pleasure in the 18th century.