Yes, absolutely.
When Finance Minister Jim Flaherty renewed our commitment to the provinces and territories at the end of the health accord, he renewed, for the next 10 years, record-level funding. Of course, that includes an escalator of 6% up to 2016, and after that a 3% escalator for the provinces. That means that by the end of the decade that amount will reach $40 billion annually. That's a 70% increase in federal transfers, just for health care, since 2006.
That is very important to the provinces and territories because it has allowed them to plan their own budgets in a much more predictable way, and it's probably the area in which they are struggling the most when they think about the impact on other parts of their own provincial budgets. Let's remember that health care takes up a great deal of the federal budget, but it takes a great deal, if not 50%, of most provincial budgets, so they are struggling with figuring out ways to curb costs at the provincial level, because otherwise they're going to have to look at the impact it has on other services.
I think one of the things we should think about is the latest information out of the Canadian Institute of Health Information. Since the year 2000 health spending by provinces and territories grew by less than 5%, and since 2010, spending by provinces grew by less than 3%. So if you think about that and the amount of increase and the escalator we're applying to the funding we give to provinces and territories every year, that means that for the next three years, with a 6% escalator, our transfer increases are projected to continue to rise at more than double the rate of health spending increases by the provinces. We are well in line with providing them with the appropriate amount necessary.
However, I think the other part of the discussion has to be around money, because while health transfers are at record levels, the truth is that provinces are trying to find ways to curb their costs, because if you look 20 years out and if we continue down the track we're on, it would basically take up the entire budget of every province, and that's completely unsustainable.
That's why we're focused on innovation. That's why we're focused on working on the recommendations that come out of the panel in June, with the provinces and territories, to look at what we can do to innovate our health care system. If we don't do that, I think we're letting Canadians down, because we invest heavily per capita in health care, but we don't have the best health care system in the world. I like to brag about this health care system, but there are areas in which we can improve, and I think only through innovation will that happen.
We are making those investments in innovation and we'll continue to have that conversation with the provinces about supporting them in areas, such as the strategic patient-oriented research partnership we have with the provinces, and other investments we made recently in the budget.
This is a good time to have this conversation because we have money on the table for the next 10 years in health care. Let's talk about the smart way to spend it, and the best way to get the best possible outcomes for Canadians. I think that's what our government is focused on now with the provinces, and I think it will benefit the health care system.