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Knight received a 27-year non-parole sentence in 1988 for the 1987 incident where he killed seven individuals and wounded 19 others in Clifton Hill, Melbourne.
He was marked never to be released under a Victorian law change in 2014.
Special state legislation, specifically targeting Knight, was introduced to keep him behind bars indefinitely.
After 38 years in high-security detention, the convicted mass murderer has been relocated to a rural prison with a lower security classification.
From 1988 to 1996, Knight was held at Pentridge Prison, then at Barwon Prison until 2005, and has spent the last two decades at Port Phillip.
Corrections Victoria confirmed earlier this year that Port Phillip Prison is set to close by the end of 2025 as part of male prison system reforms in the state.
Once the state’s largest maximum security prison, Knight was among over 1100 inmates who were locked up at Port Phillip.
Knight moved to Loddon Prison in Castlemaine two weeks ago after years of lobbying for a lighter security cell.
Knight had claimed he was being targeted due to the notoriety of his crimes.
It is the first time Knight is serving his sentence in a medium security facility.
Loddon is described as a ”campus-style prison”.
According to its website, Corrections Victoria states, “The landscaped grounds, modern buildings, and variety of programs and activities create an environment closely resembling what is available to the general public.”
Victorian Premier Jacinta Allan said Knight’s movements were determined by Corrections Victoria.
“It was a number of years ago but the pain is still there,” Allan said.
“He continues to be incarcerated and that incarceration, the decisions of his placement, are made by Corrections Victoria.”
Corrections Victoria said it regularly reviews the security classification of prisoners.
“Security classifications consider several factors, including the risk posed to staff and the community,” a spokesperson said.
“This includes the work of the High Risk Management Advisory Panel.
“The panel, comprising members from the Australian Federal Police, Victoria Police, Corrections Victoria, and a former Supreme Court Judge, provides recommendations to the Corrections Commissioner,” it continues.
State Opposition Leader Brad Battin said he believed the families of Knight’s victims would be “absolutely devastated” by the prison security downgrade.