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After a certain age, kids understand the need for privacy in the bathroom. Use that for your argument. Here's how I'd try to direct the conversation:
 

Say the school wants to install cameras in the bathroom to monitor the sinks and toilets to ensure that (1) the kids flush and (2) wash their hand thoroughly. Failure to comply will result in lost recess.

At this point, the kid should feel this is creepy and unfair, good.

One day, you find pictures of yourself using the toilet and washing your hands in your locker, posted on the walls, and in many other public places. You talk to the teachers and the principal, but they don't know how they got there as the "system is secure." No one is punished and new photos are found every day. The administrators refuse to remove the system because the toilets remain clean and the kids are washing their hands and there is a confirmed decline in the absentee rate due to illness. Besides, if you flush and wash your hands, you have nothing to worry about, right? By the way, I have reports that you've stopped flushing and washing--so your recess is revoked. You say you've flushed and washed, but our bathroom officers say otherwise, please report to the punishment room.

By now, the kid should see something is wrong and is angry about the proposed system: good, you've taught them the need for privacy, security, and how an authoritarian system designed for the public good can be abused and harm everyone. The analogy can be scaled up for the high schoolers or down for the kindergartners.