These are separate questions, so I'll answer them in order.
Why aren't any governments focusing on wealth inequality and property supply-centered policies?
There are governments that focus on reducing wealth inequality and increasing the overall property supply. Socialist countries, like the PRC, Cuba, Vietnam, etc. They still have some lesser degree of inequality, of course, as well as their own struggles and issues from standing against the broader Capitalist hegemony, but there is a concerted effort in Socialist countries to address the needs of the working class through their structures, reflected in improved metrics in areas sensitive to their Working Class, such as China's directed and planned efforts at successfully eliminating extreme poverty at a breakneck pace, or Cuba's advanced healthcare system. China in particular does focus on supply a lot, that's why they are endlessly building new cities to anticipate future necessity, the famous "ghost cities" that in reality are sound planning and help increase employment. They also have some of the most advanced automation and manufacturing, their strategy in the long run depends on rapidly increasing the productive forces.
As for small and medium-sized businesses, these disappear over time in favor of larger firms, and either grow or fail to be capable of influencing the system like the large firms do. In all countries, regardless of economic model, as long as markets persist there will be a gradual increase in proportion of production held by large firms compared to smaller firms, as competition forces growth and centralization. This is actually one of Marx's most important observations, and forms the basis of Marxism's scientific view of Socialism compared to earlier Utopian Socialist types like Robert Owen and Saint-Simon. The earlier Utopian Socialists thought that if you could picture in your head a good society, you could implement it directly, through fiat, simply by convincing others to follow suit. This ended up being wrong, of course.
Why can’t any government in the world aim to tax ultra rich more whilst making easier for small to medium large businesses to thrive? And policies on property supply rather than property buyers like all sorts of first time buyers programs?
The "ultra rich," in Capitalist countries, control the government through mechanisms such as lobbying. In order to truly tax the rich and provide large safety nets, the working class needs to have control of the State. This is far easier said than done, however, even Capitalist democracies aren't genuinely democratic. If you look at US policy polling, systems like Single Payer healthcare are extremely popular across the board, yet that isn't seen as a genuine possibility despite being proven in many other countries in various forms. Revolution is necessary, and this requires working class organization.
The Nordic Countries that, on the surface, seem to have the best of all worlds in this respect on the outside hide that they fund these nets through international usury, large IMF loans and the like. They function as landlords in country form, essentially, so their working class is just as exploited internally, yet bribed using much larger exploitation globally. The US, of course, is the largest Empire and consequently its Imperialism is on a far larger scale, but that doesn't mean the Nordic model would "work" for the US, as the profits of Imperialism to a greater extent go to the US bourgeoisie as compared to the Nordics, where comparatively stronger labor organizing gives the Nordic working class more of a bargaining edge. Perhaps temporarily, but Capitalists in the US hold enourmous power and organization of labor is weak, ergo this is certainly an uphill battle to begin with and still leaves open the necessity of overcoming US Imperialism.
Why are only same old policies keep being peddled when the world is still going to shit?
Old policies rise as the contradictions within Capitalism, ie wealth inequality, concentration of Capital into fewer and fewer hands, and so forth, sharpen. Fascism in particular is like a self-defense system for Capitalism against rising Leftist organization, generally. As Gramsci said, "The old world is dying, and the new world struggles to be born; now is the time of monsters."
Look to Socialist countries to see where new ground is being tread. It isn't all sunshine and roses, but progress is coming steadily. The CPC describes its process as "crossing the river by feeling for the stones," you test for footing and pivot direction if it doesn't work, gradually, and iteratively and continuously focus on refinement and improvement.
That doesn’t involve reducing the government size and budget entirely or subscribing to any extreme left or right?
The policies you ask for aren't extreme anything, really. They are easy to think of, and easy to question why they aren't seen as a priority. The part where this shifts dramatically to the Left, is translating those ideas into reality. Just like you cannot simply ask a banker to give you free money, Capitalist systems will not let you simply take from the dragon's hoard, regardless of how that hoard was gained. The "right-wing," liberal Capitalist answer is Imperialism in order to implement Social Democracy a la the Nordics, while the Left-wing answer is Socialism, as seen in previously mentioned countries like Cuba, the PRC, Vietnam, etc.
Being "extreme" in the sense of being a solution outside the overton window doesn't mean the stance is wrong, either. Socialism is correct, despite being outside of the status quo in Western countries.
If you're interested more in analysis along these lines, I keep an introductory Marxist-Leninist reading list oriented towards absolute beginners to political theory.