"We need to get this right, rather than rushing something through, because the main thing we want to encourage is participation in sport," says former Olympic swimmer Dean Kent. "No-one should be barred from access, but obviously it needs to be done in a safe and fair manner."

Kent adds that for sports like lawn bowls, the policy isn't going to matter, but with community and club sports like swimming or weightlifting, or collision codes like touch, it will.

Former New Zealand chef de mission Dave Gerrard says particularly young men who identify as female have "bigger frames, stronger muscles, and a different biomechanical advantage in terms of hip width and shoulder width".

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• Transgender Sports

Sport NZ says its document is all about inclusion, and it will consult all codes to individually work out their best approach to health and safety of athletes.

The draft proposes unisex uniforms and bathrooms at venues, and privacy guidelines for transgender athletes, affording them the right to compete in the gender they identify with, whether they've fully transitioned or not.

"Diversity is an incredibly important model for sport in NZ, so we need to make sure we are creating an environment for all young people regardless, so they feel safe and welcome," chief executive Raelene Castle tells Newshub. 

Castle says, more often than not, people want to feel they are included, and that's why Sport NZ wants to focus less on winning and taking away opportunities from other women, and more on including everyone. 

Transgender Kiwi weightlifter Laurel Hubbard is New Zealand's most high-profile transgender athlete. She will make history in Tokyo, after meeting the IOC's rules relating to acceptable testosterone levels.

But at community level back home, Sport NZ may have a fight on its hands, particularly with clubs where contact sport is played.

"There's not a perfect black-and-white answer," says Castle. "We will work alongside the sports, as they face these challenges, but transgender people just want to feel included."

Gerrard maintains there's scope for more consultation across the community and wants the Minister to intervene.

"We are not trying to disadvantage or exclude transgender athletes from participating, we are just talking about those transgender females who wish to compete against biological females and maximise the advantage that they have."

Sport NZ says the consultation process is only in its first phase.