I am wanting to know what the policy for softer mattress toppers underneath a fitted sheet for children over one is? Is it still discouraged to use them to make the mattress softer?

Red Nose recommends that any mattress for a baby should be firm, clean, well-fitting & flat (not elevated.)
https://rednose.org.au/article/what-is-a-safe-mattress

This is to reduce the risk of Sudden Unexpected Death in Infancy (SUDI) - which is the death of a baby less than 12 months of age.
Red Nose generally recommends that you continue to follow all the guidelines while the child is in a cot - Red Nose does not have any specific information about soft mattresses after 12 months & whether there is any risk to baby from suffocation.