This law was passed specifically to allow Aryeh Dery to ignore the terms of his plea agreement and serve as a minister. It's not related to the Jewish-Arab demographic balance (which, within the 67 borders, is about 85-15).
That's technically true but also myopic. This was an explicit step to weaken the judiciary, strengthen the hard right and also indicted PM. This move is not explicitly anti-arab but it greatly empowers anti-arab leaders at the expense of democratic fairness. And rather severely at that. This was a canary. The next bill be worse and the one after worse again because they know they can't be stopped.
As the current government is making abundantly clear, 67 borders are irrelevant. There are roughly the same number of Jewish and Arab people within the territory Israel controls.
In the past the Israeli justice has been reasonably independent of the government, as can be seen from this long list where Aryeh Dery figures prominently:
Even if the law passed now might have only the tactical goal of promoting Aryeh Dery once more, it certainly will allow the government to do unsanctioned in the future other things that could be much more harmful.
