A debate over whether transgender women who were born male could be discriminated against over a “potential pregnancy” has erupted in Federal Parliament.

A budget estimates hearing late on Tuesday saw WA Liberal Senator Michaelia Cash challenge Australia’s Sex Discrimination Commissioner Anna Cody over her suggestion that pregnancy protections for biological women extended to trans women.

Dr Cody, representing the Australian Human Rights Commission, said if a trans woman was rejected for a job because she had expressed a desire to have children during a job interview, she may have been subjected to unlawful discrimination.

After a “very confused” Senator Cash said a biological male could not become pregnant, Dr Cody explained existing discrimination laws covered both pregnancy and “potential pregnancy.”

“It’s about the unlawful treatment by the employer. If someone is treated unfairly on the basis of pregnancy or potential pregnancy, then that is unlawful discrimination on the basis of pregnancy,” she told the hearing.

Senator Cash replied: “But if they can’t become pregnant, how can you then become potentially pregnant?”

“I’ve got to go back to school. I seriously do, because I missed that lesson in biology. I went to a convent school. The nuns may not have told me about it.”

Dr Cody said the law could apply to a trans woman if an employer unknowingly assumed they had the potential to fall pregnant, and discriminated against them because of this.

Senator Cash then asked “what stops a man putting on a dress, walking in and claiming the protections?”

Dr Cody said in that case, it would be up to the court to decide if the man had been discriminated against.

Senator Cash said the exchange exposed the “absurdity of the law.”

“The law does need to be changed because . . . biological men, it doesn’t matter what way you cut it, you can not get pregnant.”

“Quite frankly it is an insult to women who are discriminated (against) when they want to have children.

“The good news is, what we’re proving today is, the law needs to be changed.”

The Sex Discrimination Act has been in the spotlight after a landmark Federal Court ruling last week upheld a decision that transgender woman Roxanne Tickle was discriminated against when she was excluded from a female-only app.

In response, Opposition Leader Angus Taylor vowed to reform the act to define biological sex.