Hughes, who finished 12th on the Nationwide Tour money list this year to earn a 2005 PGA Tour card, had an eagle, six birdies and a bogey on the Huntingdale course to take a one-stroke lead over defending champion Robert Allenby.
Sixty-two of the 120 players were unable to finish the round.
Allenby, who won a four-man playoff last year, shot a 66. The Australian star had 10 birdies, a double bogey ' on the par-5 seventh ' and two bogeys.
'I don't ever remember having 10 birdies around here except in a social game,' Allenby said. 'I was trying to be aggressive as possible. ... With the rain we've had the last few days, the greens are soft, a nice speed and very receptive.'
Australia's Craig Parry, one of the playoff losers last year, birdied the final five holes to join countrymen Brad Kennedy and Richard Ball at 67.
'I remember when shooting par over the closing holes was good, but five birdies?' Parry said. 'I couldn't get anything going on the front nine, but it all came together on the back.'
Australia's Peter Lonard, seeking his fourth straight victory, shot a 68. He began the streak in the New South Wales Open on the secondary Von Nida tour, successfully defended his Australian Open title and won the Australian PGA last week at Coolum.
Ricky Barnes, the 2002 U.S. Amateur champion, and 1995 U.S. Open champion Corey Pavin, also were at 68 along with Jason Day, the 15-year-old Australian amateur who won the world and Australian junior titles.