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The man killed his wife, but escaped a murder conviction on the grounds of insanity.
Australia's Victorian Civil and Administrative Tribunal says he should be allowed to drive taxis, local media reported.
But, the state's public transport minister, Lynne Kosky, says the law will be changed to stop people with similar backgrounds getting taxi licences.
She told the Australian Broadcasting Corporation: "The assurance that I can give to the public is that we will ensure that out taxi industry is safe, we will take all measures and we're doing that to make sure that our taxi industry is safe, we've currently got audits in place, and we will take every step possible to appeal this decision."
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