Moorabool Council will host its first flag-raising for International Day Against Homophobia, Biphobia, Interphobia and Transphobia at its Ballan chambers from 10am on Wednesday.
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The rainbow flag will also be flown over its offices in Darley.
It comes after almost three years of councillor debate - and later a 'welcome' campaign launched in local shops.
"As a Council, we're committed to showing support and solidarity for the LGBTQIA+ community," mayor Rod Ward said.
"We're very pleased to be hosting this flag raising event in Ballan and encourage the community to attend or to pick up a rainbow flag from our Ballan, Darley or Lerderderg Library (Bacchus Marsh) customer service centres."
The issue was first raised ahead of the 2020 council elections, when several members of the public approached Cr Tonia Dudzik about flying the flag on occasions such as IDAHOBIT (International Day Against Homophobia, Biphobia, Interphobia and Transphobia).
In April 2021, the idea was rejected.
Councillors voting in favour said it was a symbol of "welcoming" - while others told the meeting it would be costly, the flag was divisive and LGBTIQ+ people were already integrated into the community.
Since then, community group the Moorabool Rainbow Allies has run a "You're Welcome" poster and sticker campaign across the shire's shops, as well as "A Rainbow Over Moorabool" - a push to encourage locals to fly the flag on private property every May 17.
The campaign has also highlighted the shire's links to Captain Moonlite - a lay-preacher-turned-bushranger who robbed a bank at Mount Egerton, escaped Ballarat Gaol and was later interred with a male companion
Eureka (then Buninyong) State Labor MP, Michaela Settle also offered Moorabool two rainbow flags free of charge, after one councillor said cost would be an issue.
"In the end, Moorabool sourced their own rainbow flags independently," she said from State Parliament.
"I'm really happy to see the flag being raised because this means every local government area across Victoria is having a flag raising for IDAHOBIT Day.
"It's incredibly important because it makes it clear that equality is not negotiable in this state."
Ms Settle said she would be at Wednesday's Stead Street ceremony "in spirit", but was attending Parliament this week.
"In light of the terrible threats that have been made - targeted at libraries across the state - it's important that the community stands together," she said.
"Some Rainbow Storytime events may have been cancelled, but we are still showing that we stand by our trans community."
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