Independent State of Rainbow Creek

It was founded as a result of a long-running compensation dispute between a group of Victorian farmers in the town of Cowwarr, and an agency of the Victorian state government, the State Rivers and Water Supply Commission (SRWSC).

A road bridge built over the Thomson River at Cowwarr in the late 1930s proved to be sited too close to the annual flood high-water mark, so when that structure proved an impediment to the flow of debris during a particularly violent flood in 1952, the river simply carved a new course for itself around the edge of the bridge. This "breakaway" - later named Rainbow Creek - passed through a number of privately owned farming properties. Remedial action proved ineffective, and the creek was enlarged by subsequent flooding to the size of several football fields - at the expense of the affected farmers’ lands.

The farmers began using water from the creek to irrigate their properties, however, local and state authorities responded by serving them with levies for water use. Those affected had to pay one set of levies to the local council for land which was now underwater because their title deeds did not show the existence of the creek, a second levy to the SRWSC for using creek waters for irrigation purposes, and a third levy to the Thomson River Improvement Trust which was supposed to prevent further erosion by the creek - which nonetheless continued to grow with each new flood. The SRWSC then constructed a weir across the river downstream of the bridge in 1954, which had the effect of funneling even higher volumes of floodwater directly into Rainbow Creek.

By the late 1970s, the creek was 8 metres (26 feet) deep and over 50 metres (164 feet) wide, and farmers had to privately fund the construction of bridges to cross from one part of their properties to the other. These were all washed away, along with crops, stock, and equipment by particularly severe flooding in 1978. The farmers of Cowwarr had long blamed government incompetence over nearly three decades for their woes, but when they were denied the right to claim compensation for loss of land, productivity, and private infrastructure in 1978 they decided to take further action.

One of the worst affected properties was Yammacoona, located directly below the weir, and owned by Thomas Barnes since 1970. Barnes was a retired UK and Victorian police officer who had settled in the town some time before. He was known as a man of feisty temperament with little patience for the slow-turning wheels of government bureaucracy, and a flair for publicity.