The pair won all nine stages to lead the leg by a massive 9min15.8seconds from Richard Anderson/Martin Darch (Alfa Romeo Alfetta GT).
"It was the best day's rallying I've ever enjoyed," Bates said. "I was the pioneer on the road this morning - the first car out on slippery stages, but the car was superb.
"The road had dried for the second pass and we were able to safely take a lot of time out of our first stage times."
Bates rebuilt the rear-wheel-drive RA40 as a replica of the Ove Andersson world rally championship car of 30 years ago to compete in the Australian Classic Rally Challenge, which is for pre-1986 rally cars.
Five-time national champion Ross Dunkerton and co-driver wife Lisa (Ford Escort RS1800) retired after stage one with engine failure.
Australian Classic Rally Challenge series leaders Jeff David/Grant Geelan (Porsche 911) challenged Bates until mechanical difficulty forced them back to sixth.
The Australian Classic Rally Challenge of the International Rally of Queensland resumes with Leg Two tomorrow.
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