"As we plant indigenous trees I'm going to get my indigenous nephews off their nono and they're going to go to work," he told Newstalk ZB's Mike Hosking Breakfast.
First Union general secretary Robert Reid said the entire union movement was implacably opposed to the idea.
"It's long-standing policy for the union movement right from when it was tried by the National Government in the 1990s.
"What we are in favour of is work-for-wages schemes for unemployed people, even on a temporary basis like the 1970s and 80s schemes."
Reid said this would give workers the dignity of working for a proper pay packet as opposed to the indignity of working for the dole.
The Employers and Manufacturers Association (EMA) said that although it had not seen any details around the scheme "it would be fair to say that the EMA would support an initiative like this in principle".
Business NZ chief executive Kirk Hope said depending on the regional initiatives that received a share of the $1b fund, labour could be needed for things like planting trees.
"The funding could conceivably pay for currently unemployed people to be employed. We'll look forward to hearing the detail on that. There's a lot of room for innovative use of that fund, including widening employment in the regions."
Jones said many provincial leaders had contacted him about the fund, but added that he'd been given a stern warning from his Cabinet colleagues.
"It must meet a high threshold, the criteria will be signed off by Cabinet. I'm keen as mustard for the provinces to be the beneficiaries but Cabinet will have to approve all the projects.
For example, Crown equity could be put into a wharf at Opotiki, which would unleash local economic potential.
