I do see a potential problem: being accepted as Indigenous requires no minimum amount of ancestry; identifying as Indigenous is increasingly seen as a social benefit rather than detriment, and hence people with that ancestry (or even without it) will seek that identity out; some Indigenous community groups will try to limit access to an officially recognised Indigenous identity, but those who seek it will gravitate towards those community groups which are most generous in recognising it, and those groups will grow in power and influence as a result, producing a feedback loop which encourages lowering those barriers over time; intermarriage rates between Indigenous and non-Indigenous people are high (over 50%) – isn't the likely result of this that, in the long-term, more and more of the population will be Indigenous? It is one thing to argue for "affirmative action" for a minority which is only 2-3% of the population - what happens as it grows to 5%, 10%, 15%, 20%, etc?
It also potentially results in two groups of Indigenous people – one group with majority Indigenous ancestry, found mostly in remote/regional/rural areas, who experience a great deal of social deprivation; another group with minority (in some cases even only slight) Indigenous ancestry, found mostly in urban/suburban areas, who experience far less social deprivation. With all this talk of "closing the gap", counting both groups as "Indigenous" makes "the gap" seem smaller than it actually is, and if the second group is growing, that growth can create a false sense of progress of the gap being closed, even as little or nothing improves for the first group.
Meanwhile it creates stigma around Indigenous = disadvantaged which a) is a terrible way to label a group and b) ignores all the other disadvantaged people for the sake of signalling empathy the 'right' way.
When I said "no minimum amount of ancestry", I meant "minimum" as excluding "zero". So, a person with literally zero Indigenous ancestry, cannot be Indigenous by the official definition. However, if a person has non-zero Indigenous ancestry, the official definition doesn't care how slight that ancestry is.
Furthermore, the official definition is not phrased in terms of DNA, only descent. Many Indigenous communities object to the use of DNA testing in determining Indigenous status, and as a result it is mostly not considered in deciding these questions.
The official definition is ambiguous in using the word "descent" – while most commonly that is interpreted as "biological descent", it isn't clear that merely legal descent (as in legal adoption) is actually excluded. If an Indigenous person legally adopts a biologically non-Indigenous child (or has such a child through IVF, surrogacy, sperm/egg/embryo donation, etc), and the child is raised to identify as Indigenous, and their Indigenous community accepts that child as Indigenous – there is an argument they officially are Indigenous, and given the unresolved ambiguity in the official definition, I don't know how one can say that argument is incorrect. In practice, if the elders of their Indigenous community write a letter declaring them to be Indigenous, the government will very likely accept them (and their descendants) as such.
It has little to do with politics except how political parties (yeah both) will manipulate it. It's a societal issue. It's a pity everything is politics and polarisations these days.