I too sympathise with the controller, quite likely overworked.
can't find the basis for what appears to be a harsh conclusion with no supporting evidence
ATC is supposed to advise pilots of traffic so they can arrange their own separation. In this case there was heaps of traffic, but he did not advise them, and the collision happened a minute later. The instructor (and student) was aware there was traffic (from the radio) but was not told where to look.
Not being a MMB local, why don't they bring inward traffic in at 1500 AGL and make departues leave at 1000 AGL? Would remove the conflict IMHO.