The federal Department of Fisheries and Oceans spent about $6 million three years ago on the community's wharf and breakwater, but it disrupted currents to such an extent that fishing vessels were damaged.
Engineers agreed with the complaints, and last winter DFO built a $750,000 extension to the berm.
"They told us then it would improve the harbour conditions by 80 per cent," said Cluney Pardy, a fisherman who works with the town's harbour authority.
"Right now the conditions around the wharf is about 80 per cent worse."
Fishermen have reported broken ropes and chains, and have become seasick while unloading their catches. Boats have been damaged, and the new wharf is even starting to disintegrate.
Pardy said the supposed fix has backfired so badly that Musgrave Harbour — instead of gaining the new business that had been desired — is losing traffic to other ports.
"I been fishing here for 33 years, and it's the first time I've ever known that a boat leaving Musgrave Harbour to go to another port because of safety reasons, for fear of losing the boat," he said.
DFO said in a release that they are "in the process of reviewing the concerns of harbour users and a new assessment of the breakwater extension."
They also said that the improvements to the breakwater were done in consultation with the harbour authority.