Hughes, a two-time winner of the event, followed up his first-round 8-under 64 with a bogey-free six birdie effort to distance himself from defending champion Robert Allenby.
Allenby, who won last year in a four-man playoff, posted a 4-under-par 68 and sits four back of his fellow countryman and alone in second place.
Peter Lonard, looking for a shot at the Australia Slam after having won the Australian Open and the Australian PGA Championship in the previous two weeks, stands at 9 under and five off the pace. He is tied for third with David McKenzie as they head into the weekend.
American Ricky Barnes stands at 8 under after Friday's round and is joined by Aussies Richard Green, Jarrod Moseley and Geoff Ogilvy.
Craig Parry shot a 2-under 70 and is in a big group at 7 under, while Stuart Appleby shot his second straight 3-under-par 69 and is left in a tie for 18th at 6 under along with former U.S. Open champion Corey Pavin.
Fifty-nine players had to start early in order to complete their first round of play that was washed out due to rain on Thursday.
Seventy players made the cut for the weekend including young Ty Tryon form the United States.