He said there were huge job shortages as a result of a constrained economy and constrained immigration.
"I think what's more disturbing ... is you've got 50,000 more people on a Job Seeker benefit, that's a short-term benefit to accompany, help people through a job transition."
The benefit numbers for the year at the end of June showed a 9.7 per cent decrease in work-ready people on Job Seeker support compared to the previous year.
That was 100,086 people, about 60 per cent higher than the 63,030 when Labour took office in 2017 but down from the peak 2020 year when the number was 123,966 people.
Luxon wants to remove employment as a consideration for the mandate from the Reserve Bank.
He would not give an employment rate he felt was appropriate.
But was "single-mindedly focused" on inflation, he said.
"That is the single biggest damage to our economy right now and that is the thing we needed to fixated on."
He doubled down on National's stance that a "proper plan" was needed to deal with the underlying causes of inflation.
"So you've got this massive inconsistency between government spending and Reserve Bank monetary policy and you need both of them to be ruthlessly focused on.
"This is serious stuff, it causes huge hurt, pain and suffering."
National has called for an independent inquiry into the Reserve Bank.
Cost of living payments an 'utter joke'
The first of three $116 cost of living payments was made this week to New Zealand tax residents who earn up to $70,000 and not receiving a main benefit.
Some former residents and New Zealanders living overseas also received the payment - the Government didn't know exactly how many people.
Prime Minister Jacinda Ardern said it was not worth chasing those people to get it back.
"It's just an absolute utter joke and to be honest it's a total shambles. I just think the Government's become a political version of The Office," Luxon said.
His deputy Nicola Willis had been speaking out on the issue since Monday.
Luxon said it was a government decision made under pressure just before the Budget.
The cost of living payment was disrespectful of taxpayers and their money, he said.
"This is not the Government's money, it's people that are waking up ... going to work, paying their taxes, and to sort of see it going to investment bankers in London and backpackers in France is just not acceptable."
He said the "most elegant and simplest way" of getting cash into people's pockets was to "power up the existing system and just power it up by the amount of inflation that's happened" - reaffirming National's preference of tax cuts.
"Why don't we just put the existing tax thresholds up so that people get to keep their own money?" he asked.
"That would be enduring and ongoing."
- RNZ
