I wasn't there (would be a miracle if I was at this point in time) and so didn't hear the transmissions. The last time I was at the Gold Coast (July last year) I was pretty impressed with their helpfulness and attitude.
There are few things more irritating than being held up coming into CTA because some "verbally challenged" person needs 4 attempts to read back an airways clearance. Fairly common around EN. Or having to delay a descent because another aircraft is unable to tell you whether he is North or South of the airfield that you're going to land, etc.
There's a current thread on D&G regarding the increasing numbers of pilots with poor spoken English, and threads that revolve around the lowering of R/T standards are common. But when a controller informs a pilot that his R/T is poor, you're all outraged.
Perhaps the Controller was less than professional, but he probably voiced what myself and plenty of other pilots have thought on many occasions.
Questions for the instructor:
Did you coach your student on the radio calls that he could expect in CTA prior to this flight?
Has this student had previous problems with readbacks and broadcasts, etc? If so, did you do anything about it, especially prior to going into CTA?
Before reporting the contoller to his superiors, did you contact the Controller and ask him/her why they replied like that?
And let's face it; if having an ATC tell you "not good enough" is the worst thing that's happened to you today, then (IMHO) you're still having a pretty good day.
Stay happy,
DIVOSH