The New Zealand prime minister gave a foreign policy address at the Lowy Institute in Sydney on Thursday night as part of a two-day visit to Australia.
The two countries are already formal defence allies, with a closeness comparable to any two countries across the world.
Mr Luxon, whose centre-right National party won last year's election, said he wanted to grow ties even further, maximising the ways the two countries can work together.
"New Zealand is committed to remaining a credible and effective ally and partner," he said, foreshadowing increased defence spending.
"New Zealand too must be a participant and a contributor not an interested bystander."
The government is soon due to release a new defence capability plan, which will outline key defence purchases and priorities for the next 15 years.
Mr Luxon said "strengthening interoperability with our ally Australia will be a central principle of our capability decisions".
In other words, New Zealand will look to buy similar or complementary defence assets to ensure keep Anzac forces marching to the beat of the same drum.
"It's important we can continue to deploy alongside each other in response to the growing array of security challenges we face, particularly in the face of rapid technological change," he said.
Taking questions after his prepared remarks, Mr Luxon went further, saying he wanted New Zealand's defence "to be a force multiplier for Australia".
Those remarks are likely to please Canberra, but enrage critics back at home - including former Prime Minister Helen Clark - who accuse Mr Luxon of shifting New Zealand's foreign policy too closely towards Australia and its ally the United States.
New Zealand is not involved in the AUKUS military pact which will see Australia acquire nuclear-powered submarines, and could not be given its long-held anti-nuclear position.
However, Mr Luxon confirmed it was currently scoping out whether it would join the second pillar of the agreement, which sees aligned countries share military technologies.
"We think AUKUS is actually a good thing for regional security and we've talked about that positively within the broader Indo-Pacific region, and certainly within the Pacific region," he said.
Mr Luxon also suggested the defence capability plan may surface later than expected.
Earlier this year, Defence Minister Judith Collins said she had brought the review forward to be finished by June, before pushing it back to September.
Mr Luxon told the Lowy Institute "we expect that to be completed towards the end of this year, maybe early next year".
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