He sounds dreadful - the school should get rid of him.
I had a flute teacher that used to say 'that is reasonable', and that was his biggest compliment. My dad and I used to laugh about it, and he was an amazing teacher in other ways, but just not a bubbly man. You have to be a lot better than Grade 3 to cope with this sort of teaching - it doesn't work at all before grade 8 has been passed (with another teacher, because this sort of teacher will never enter pupils)IME.
I would never be so negative in front of the parent (or ever in fact). Maybe that's because as a private teacher putting food on the table means I have to retain pupils, whereas this guy gets paid and a constant stream of kids however miserable he is. Or maybe it's because my last teacher was wonderfully enthusiastic and used to support and praise her pupils (it was a bit of a cliche though). But by then it was too late for me to believe in myself.