New Zealand's leg of the international sailing competition was cancelled on Saturday when a Hector's dolphin was spotted near the start line in Lyttelton Harbour, near Christchurch.

The Hector's dolphin is the smallest and rarest marine dolphin in the world, according to the WWF, with just 15,000 animals, all located near New Zealand's coast.

The Department of Conservation lists boat strikes as one of the species' main threats, with Lyttelton Harbour a known breeding location for the species, currently in calving season.

Those factors led organisers and local authorities to develop a Marine Mammal Management Plan (MMMP), which empowered an independent expert to make the call on allowing the high-tech super-fast catamarans to race.

When the expert stopped the race, the backlash was swift.

SailGP chief executive Russell Coutts, knighted for his successes as a Kiwi sailor including the 1995 America's Cup win, said it showed New Zealand was "handcuffed by unprecedented layers of bureaucracy and red tape".

Sir Russell, also a leading voice against New Zealand's COVID-19 restrictions, fumed at the involvement of local Maori tribe Ngati Wheke in developing the MMMP, saying it was "astonishing the amount of influence (Maori) have over the authorities".

The issue has captivated many sailing-mad New Zealanders, running on the front page of the country's news websites, and drawing politicians into the fray.

Prime Minister Chris Luxon said he wanted to re-balance protections to the environment with the ability to stage similar events.

"We have turned ourselves into red tape and an obstruction economy," he said.

"We've got more work to do around making sure we don't put barriers and obstacles in the way of us being able to attract world class events."

Regulation Minister David Seymour said society needed to accept the risk-taking inherent in such activities.

"I know people will say 'what about the dolphins?'. Well I love dolphins too," he told Newshub.

"There are risks in every activity we do, the only safe thing to do is to stay in bed but actually, that's where a lot of people die too."

SailGP's rage was at odds with its position before the regatta, when it used the MMMP to champion its environmental bona fides.

"It's an industry-leading example of SailGP's commitment to the environments in which we operate," managing director Andrew Thompson said.

Greens co-leader Chloe Swarbrick said the "common sense" Mr Seymour was pleading for would have been best employed to not stage the event in a known habitat during calving season.

"There were conscious decisions made to hold this race within a marine mammal sanctuary," she said.

"We want to see the protection of our native species and in order to do so we need regulation that sees them meaningfully protected."

Ngati Wheke spokeswoman Mishele Radford also questioned Sir Russell's attack on them, saying SailGP "knew what they signed up for when they decided to hold the event within a marine mammal sanctuary".

"Ngati Wheke would have loved to see racing happen too, while ensuring the protection of precious nationally vulnerable Upokohue/Hector's dolphins."

Local MP Vanessa Weenink raised eyebrows when she said organisers should have "helped to move the dolphins on".

"The dolphin behaviours, they're doing their thing all the time, we can make some predictions about what they're going to do and where they're going to be but you can't be sure until the time," she told Radio NZ.

Australia is the three-time reigning champion but when racing did get underway in Lyttelton on Sunday, they crashed out.

They now trail New Zealand's entry, the Black Foils, for the series lead, which meets next in Bermuda in May.

Australian Associated Press