There was evidence before her that said McGrath had no support network in Australia, Mr Allan said in a submission that raised questions of natural justice.
The minister was also told of concerns that McGrath might not be able to obtain the "significant support he would need from lawyers to properly defend the matter should he be extradited", he said.
But while Ms Collins said that he could apply for legal aid there, there would be no guarantee it would be granted.
"She could have sought to obtain further information about the legal aid system or she could have sought assurance from the Australian authorities that Mr McGrath would be eligible for legal aid and that he would receive legal aid with the same basic rights one would expect in New Zealand. But she didn't do that," Mr Allan told the court today.
Mark Lillico, counsel for the Ministry of Justice, denied any allegations of bias.
The issue of McGrath's support network, he said, wasn't "a main theme" in submissions and only now has he chosen to complain about it.
He also highlighted that a district court judge had earlier ruled that McGrath was eligible for legal aid in Australia.
While Ms Collins could've asked the Australian authorities for assurances that McGrath would receive a fair trial, New Zealand parliament had already ruled that "we trust the Australians to get it right".
"The New Zealand government would've been upset if Australia asked for an Australian to get a fair trial. We'd throw up our hands and say of course they would get a fair trial," Mr Lillico said.
"There's nothing particular about Mr McGrath that means the government of Australia or the legal system there would oppress him."
After the two-and-a-half hour hearing, Justice Cameron Mander reserved his decision.
