The Labour party has called for a "clawback" provision that would allow the State to recoup money if State land that has been bought by private interests is subsequently sold on for large profits.
Labour party defence spokesman Joe Costello said it was "totally unacceptable" that private firms could buy State land at a bargain price and sell it on for "massive profits without any return to the State".
He was commenting after market reports that, at one point, Clancy Barracks, near Heuston Station in Dublin, was set to be sold for €145 million, having been bought by a property company for €25.4 million two years earlier.
However, it has now emerged that the sale fell through at the 11th hour when the owner pulled out from the deal. The Clancy Barracks site is owned by Florence Properties, a company indirectly owned by a trust controlled by the family of David Kennedy, an Irish-born, London-based developer.
Mr Kennedy has denied reports that he was going to sell the site for €145 million. Last week he told the Irish Independent that he fully intended to build out the development himself. He said he had the funding in place to do so and was not seeking joint venture partners.
Last month, An Bord Pleanála gave the go-ahead for an apartment and hotel complex on the site. The plan includes a 15-storey tower, which was given approval despite a recommendation by the board's inspector to reject it.
Florence Properties and Chanterwork Properties have permission to build almost 900 apartments and a 200-room hotel on the site.
The Labour party said taxpayers would be "outraged" if the €145 million sale had gone ahead as suggested.
Mr Costello said provisions should be included in all future contracts for the sale of State land to prevent such a possibility arising in the future.
He described the State's handling of the original sale as "disgraceful" and said he and others had lobbied to have the site acquired for social and affordable housing when the decision had been made to close down the barracks.
"So not only was Dublin City Council deprived of an opportunity to make a real dent in the housing crisis in the city, the taxpayers got poor value for their property and now it appears that the purchasers are free to make a massive profit by selling on without any return to the State," Mr Costello said.
