To me 'luxury' is a TV, movies, newspapers, so get rid of those. Maybe a Bible or a classic novel like Moby Dick for reading material. No education (mind you, self-improvement perhaps is a rehabilitative thing).The problem though is how we define "luxuries" and "hard labour." I have no idea about the conditions of our prisons, but the inmates basically have free housing, all their meals taken care of, heat and air conditioning, and a relatively comfortable bed.
Fuck the gym. Moe the lawn, cut weeds, bust rocks, clean garbage, remove snow, etc. That's your exercise.