Simon Bridges says more Kiwis are on the unemployment benefit because the Government has eased up on sanctions on beneficiaries.
As of June, the Ministry of Social Development reported there were 122,513 Kiwis receiving Jobseeker Support. A year earlier, it was 118,776.
"That is a result of the sanctions, the penalties, the obligations coming off," the National Party leader told The AM Show on Monday morning.
But it's the second consecutive yearly increase - the June 2017 figures, the last while National still led the Government, were an increase on 2016, when 117,954 were receiving the benefit.
Unemployment overall is at 4.2 percent - up from 4.1 percent the same time last year.
The Labour-NZ First coalition has removed, or is in the process of removing, many of the penalties introduced by National. Figures released earlier this month showed a 22 percent reduction in sanctions in the past 12 months. Mr Bridges has vowed to crack down again, should he lead the next Government.
Those sanctions apply not just to people on the Jobseeker Support benefit, but also solo mothers and others getting assistance.
There was a 3.4 percent drop in people on the Sole Parent Support benefit - from 60,631 to 58,558 - between June last year and June this year.
The overall number of people receiving benefits in June was up 0.4 percent year-on-year, but down 4.3 percent since December, according to data from the Ministry of Social Development.
Mr Bridges says while unemployment remains low, he predicts that won't last thanks to the Government's policies around oil and gas, irrigation, industrial relations, immigration and overseas investment.
"We are seeing the numbers go up."
Last year, Newshub Nation revealed Ministry of Social Development reports addressed to then-minister Anne Tolley argued sanctions didn't work, and actually cause greater long-term welfare dependency.
Statistics NZ data shows that in 2008 at the end of the previous Labour-led Government, only 2400 Kiwis had been registered unemployed for more than a year. It's now more than 16,200.
Return of the brain drain?
He also fears Kiwis will start flocking back across the Tasman.
"If you go back to 2007/8 we were exporting 30,000 New Zealanders… We turned that around. Last year it was positive for us, but already this year we're seeing a couple of thousands Kiwis net going over there. I think we'll continue to see that and I think it's a function of an economy that's not going so well."
In 2008 when National under John Key took power, 32,166 more Kiwis moved to Australia than back the other way, according to Statistics NZ data. The gap never closed - in 2016 it had narrowed to 3480, but has since widened to 5768.
The number of people moving to Australia has been static at around 20,000 for the past few years, but fewer Kiwis are coming back - dropping from 16,739 in 2016 to 14,848 in the year to June.
"My concern is we'll see more Kiwis being exported to Australia over the next couple of years."