Buying a used iPhone can save you money (I've never bought a new one). However, buying secondhand comes with its own issues. Before you buy, make sure to check its serial number at Apple's web site. It will show you if the phone is covered by a warranty, or if it can be covered by Applecare.
If you're meeting the seller in person, tap Settings, then General, then About to get its serial number. You could also find it in iTunes, or on the actual iPhone hardware (which varies according to which version you have). If you're conducting the transaction online, ask the person for the serial number so you can check it.
Before you make a final decision, make sure you're not getting screwed on pricing. Also, don't forget to use iCloud to verify that the iPhone wasn't stolen. While your warranty rights can potentially extend further under Australian consumer law than the one year Apple claims, that can be trickier to enforce if you're not the original buyer, so it's worth double-checking so you know where you stand.