It’s believed the man left the facility and stole the taxi sedan on Grenville Street after failing to prove he could pay a fare about 5pm on Tuesday.

Ballarat Taxis Co-Operative chairman Stephen Armstrong claimed the man had asked the cab driver if he could be taken to a rural property and became aggressive when refused.

“The taxi driver felt threatened and got out of the car and the man slid across the front seat and drove off,” Mr Armstrong said.

“He was able to drive without the keys because the car has a push button ignition switch.”

However, the man could not drive far without being detected as Ballarat Taxis had previously installed GPS tracking devices on all of its vehicles. 

A taxi manager immediately dialled a triple-0 operator, who relayed to police in patrol cars where the stolen car was heading, Mr Armstrong said.

The man drove for more than 30 kilometres before being arrested in bushland along Reids Road in Glenmore, southeast of Ballarat.

Officers then took the man into custody and called out a tow truck to remove the recovered taxi.

It’s believed the man had been placed under psychiatric care at Ballarat Base Hospital earlier in the week and was known to police.

When asked if there would be a review into the incident, a spokeswoman for Ballarat Health Services said on Wednesday the hospital took “professional clinical care extremely seriously”.

“All instances of clinical care are regularly reviewed to ensure that our clinical standards are appropriate,” she said.

“Given privacy matters I am unable to provide details regarding this individual.”

Victoria Police spokesman Sergeant Cameron Scott confirmed officers attended the scene of the alleged taxi theft and said an investigation was ongoing. 

No charges had been laid as of Wednesday evening. 

Mr Armstrong said the taxi driver was shaken but not physically injured. 

“He will be provided with all the support he needs,” Mr Armstrong said.