In late June 2007, the Gippsland area received record rainfall associated with an intense low pressure system. The substantial rain event followed the Great Divide Bushfires when 1.2 million hectares of public and private land were burnt and large areas of soil were left exposed.

The storm in June 2007 resulted in major flooding and widespread damage. Seven rivers burst their banks causing millions of dollars of damage to homes, businesses and farms, as well as a significant loss of public and private assets. The rapidly rising floodwaters forced dozens of rescues and evacuations. One person died as a result of the floodwaters. During 48 hours of torrential rain, more than 1000 emergency service staff worked to save homes and shops in towns throughout Gippsland. Relief centres were set up at Bairnsdale, Lakes Entrance, Paynesville, Sale, Lucknow and Loch Sport and housed up to 360 evacuees. Volunteers also provided medical aid and catering with other organisations such as the Lions Club.

The State Government established a Flood Recovery Ministerial Taskforce, which assessed community need and planned the recovery program. The Taskforce announced a $60 million Flood Recovery Initiative covering among other things the cost of work on some 400 roads, bridges and 80 walking tracks spanning hundreds of km and clearing debris from the regions’ water supplies, catchments and recreation areas.

The Insurance Council of Australia estimated the 2007 damage at $15 million, with the 2011 estimated normalised cost of $18 million.