One of the factors here is (I think) that (rightly or wrongly) there is a belief that if you declare a PAN or mayday that you'll spend the next week dealing with CASA paperwork. I think there is also an image thing that professional pilots understate the circumstances and sound cool. If you look no further than "Sully" Sullenberger as a role model, he transmitted neither a PAN or MAYDAY call but there has been nothing but praise for his handling of his incident.
I still question whether this would have made a difference. The controller knew it was an emergency and had called for emergency services at Bankstown.
I do agree with Jack Ranga that the better thing would have been to declare a PAN and reject the instruction to descend.