The feds don't want to have to hire a boat load of experts to check whether municipalities are lying to them about being open to building new housing. Because plenty have said they have opened up to more density, but the results are mixed. In BC, Victoria's changes they highlighted as leading moves for affordability have contradictory components that make it almost impossible to comply with. Or you set the minimum lot width as wider than the standard lot size for your municipality, and one that doesn't divide right, so you would always have waste even if you assembled lets say 3 lots to build 4. Which also, doesn't provide enough lift to make the economics work.
So, the feds come and say 'show me how your density plan would allow one of these 8 types of densification on 80% of your single family lots'.
It is a lot easier for the feds to ask the municipalities to show their work, than for the feds to prove that an individual municipality undermined housing development. The local Mayors will always claim market conditions, demand, blah blah.
The context of these is a decade of municipalities asking for more and more housing resources and the federal government getting more and more frustrated as the municipalities fail to spend the money they are given, and reject housing left, right and centre.
And yeah, you go back in clippings from the 40s, there are stories about the city, whether they should provide zoning for the new federal led group of cookie cutter housing, countering with, if they don't, the money just goes elsewhere. It was always this fight!
Now, out of politeness, the federal government doesn't go out and flamethrower municipalities over this. In the end, the municipalities have to deliver all the stuff, and the provinces have to help them along. Last thing you need is the provinces somehow allying with the municipalities to prevent housing being built, even more than today.