The flying of a house flag, whilst a performance is in progress, is of European origin. Norman McVicker first saw a flag flown outside a theatre in 1965 at the Royal Shakespeare Theatre at Stratford on Avon. The Pocket Playhouse was the first theatre in Australia to introduce the custom.
There were three flag poles outside the theatre. Alongside the house flag the Australian Blue Ensign and often the flag of the country where the current play in performance originated were flown.
The Pocket House Flag, designed by Norman McVicker, had a blue, red and green horizontal stripe, representing the sky, earth and sea of the Australian continent; four pointed white stars representing the four spheres of show business; live theatre, television, radio and films. The initials P. P. (for Pocket Playhouse) and the masks of comedy and drama completed the design.
Norman McVicker's Budgee Budgee site 