"The party is modernising. You can see by the number of young people. It's ethnically a lot more diverse than in was. It's more representative of modern day New Zealand. It's a very positive and healthy thing."
Ms Kaye, the MP for Auckland Central, said she had worked for 18 months on the issue with Mr Hague, a West Coast gay MP.
She said many couples had fertility issues and more were considering surrogacy.
It made sense to consider adoption and surrogacy together, as they reflected the more modern arrangements New Zealanders were choosing to structure their families.
When the MPs started at looking at the Adoption Act 1955, they decided it would be best to approach it from a perspective in which the welfare of the child was paramount.
Ms Kaye, who also supports gay marriage, said the Young Nationals had promoted the gay adoption remit.
"But the approach I am taking would be that you focus on the welfare of the child and that's not about somebody's sexuality."
The two MPs are drafting legislation to amend the Care of Children Bill 2004 based on a previous Law Commission report that looked at guardianship and adoption.
The measure should be ready in a few months, Ms Kaye said, and would be a private member's bill in her name or Mr Hague's.
It was a complex piece of work and there would be about 40 policy decisions. Some would be controversial, including the age of adoption, adoption by same-sex couples, adoption by single people, Maori adoption practices and issues relating to surrogacy.
Labour list MP Jacinda Ardern has a bill in the private members' bill ballot that would require the Law Commission to rewrite the law to allow gay couples to adopt.
