Auckland is the largest city in New Zealand, while Auckland Island is a remote island south of the main islands. Thus the flag is essentially a reversed image of the New Zealand Flag.
The UK flag in off center near the bottom for two reasons. First because Auckland Island is south of Auckland City. And second because New Zealand is in the South Pacific.
New Zealand already is down under, but there are two Aucklands in New Zealand - Auckland City on North Island, and Auckland Island which is south of South Island.
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