Jones said Kerikeri had one of the fastest-growing regional airports in the country and an upgrade was desperately needed.
About 96,000 people used the airport in 2017, requiring Air New Zealand to put on extra flights.
Replacing the airport terminal was identified as a key priority in the Tai Tokerau Northland Economic Action Plan launched in February 2016.
The proposal had also received strong support from Air New Zealand, the airport's main user.
"The current terminal is not fit for purpose and does not meet Air New Zealand's requirements, while growth in passenger numbers is also putting pressure on the existing facilities.
"A new terminal will relieve congestion and cater to visitor growth by boosting capacity and improving facilities for passengers arriving in the Far North.
"The project has third-party funding and a clear rationale for central Government funding.
"It's also among the few regional airports that central Government does not partially own,'' he said.
The Government would work with Far North Holdings, the council-owned company which owned and managed the airport, on a detailed business case for the upgrade.
Subject to the business case and due diligence, the Government would commit $1.7m. The total cost was expected to be around $4.75m.
"This is a project that will improve connectivity for tourism, the local community and businesses in the Far North and help support the growing tourism sector and create new jobs," Jones said.
Building consents have been lodged and are due at the end of next month.
Northland Inc regional promotions and tourism general manager Paul Davis said regions such as Tai Tokerau Northland were experiencing high growth in tourism and needed to provide a great visitor experience for locals and visitors alike to benefit from tourism.
"Government has rightly identified that not all regions can afford the vital infrastructure needed to support that growth," Davis said.
"Today's announcement goes a long way to enhancing the quality of the visitor experience while allowing for future growth and expansion of services, and contributing to local jobs creation.
"We see this as an endorsement of the significance of Northland's visitor industry to the regions', and New Zealand's, economic development."
