I will not use this phrase specifically, but there are times when you have a student who you know is sort of "slacking". He/she is talking, not making the most use of the time, rushing through the lesson because he/she is uninterested, doesn't like the medium, etc.
A substitute for "you can do better" is to point out the behavior that is keeping the student from "doing better". For instance you could say, "You have spent a lot of time _____( talking, up walking around, etc.) and that is keeping you from doing all the things you are supposed to be doing (then list the objectives of the lesson that you stated at the beginning)."
This way, you are not criticising the work, you are commenting on the negative behavior and how it is affecting the work.